Topps Tiles has issued a profits warning after worse-than-expected sales and extreme heatwave conditions led to traders pausing work, with underlying profits for the year to September now expected to be above £6.5 million, down sharply from £9.2 million the previous year.
Sales Decline Amid Extreme Weather
The Leicestershire-based tile chain reported a 1.8% drop in sales for the three months to June 27, with flat like-for-like revenues across its main Topps Tiles brand that worsened through the quarter. The company noted that demand has shifted toward lower-priced products due to wider consumer uncertainty, and the searing heat at the end of June compounded trading issues.
Impact on Traders and Housebuilders
Topps stated: “Recent periods of extreme heatwave conditions led to temporary work stoppages among housebuilders and traders, further affecting activity levels. Whilst there is likely to be a catch-up over a six-month period, this is unlikely to come back fully in our financial year which ends in September.”
Profit Forecast and Market Reaction
The group now expects underlying profits for the year to the end of September to be above £6.5 million, signalling a sharp fall from £9.2 million last year. Shares in the firm fell 8% soon after market opening on Wednesday.
CEO Comments on Performance
Alex Jensen, chief executive of Topps, said: “Topps continues to outperform the wider market despite weaker consumer sentiment and an increased focus on lower priced products. We’re making significant strategic progress across our priorities and the self-help actions we are taking to support profitability are working and will position the business for long-term sustainable growth. In the short term, the macro-economic environment continues to remain challenging.”
Cost-Cutting and Store Closures
The group has been slashing costs amid difficult trading conditions. In April, it announced the closure of 23 shops, representing 7% of its 319-strong estate. Store closures in its Topps and CTD brands have further pressured revenues. Topps saw its deal to buy CTD out of administration probed by the Competition and Markets Authority (CMA), which required it to sell off a number of CTD stores. The firm now has 23 CTD stores, down from an initial 31. In December, it also bought the brand of collapsed rival Fired Earth in a £3 million rescue deal after the Oxfordshire-based competitor entered administration in October, resulting in the closure of its 20 UK showrooms and 133 job cuts.
