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RNS Number : 3876V
Topps Tiles PLC
05 April 2023
5 April 2023
Topps Tiles Plc
First Half Trading Update
Topps Tiles Plc ("Topps Group", or the "Group"), the UK's
leading tile specialist, announces a trading update for the 26-week
period ended 1 April 2023.
Group
The Topps Group has developed and diversified over recent years
and now operates across three distinct business areas: Topps Tiles
is the clear market leader in the UK, serving trade customers and
homeowners in the domestic market through an omni-channel model
incorporating specialist product expertise and world-class customer
service; our high-growth Online Pure Play businesses (Pro Tiler
Tools and Tile Warehouse) are specifically focused on the digital
space; and our Parkside brand focuses on B2B sales in the
commercial market.
Having reported record years for revenue in both 2021 and 2022,
the Group delivered a record period in the first half, with
revenues of GBP130.5 million(1) , GBP11.3 million or 9.5% higher
than the prior year. Approximately GBP9.0m(1) of revenue growth
related to the acquisition of Pro Tiler Tools and the launch of
Tile Warehouse in 2022.
Omnichannel - Topps Tiles
Following a strong first quarter, Topps Tiles continued to
deliver good sales growth in Q2, with like-for-like sales(2) being
3.5% higher year on year, from one fewer trading day in the
quarter. Like-for-like sales over the first half were up 4.3%, and
Topps Tiles delivered first half revenue of GBP115.8 million(1) , a
record for the business as a standalone brand. Sales per store in
the first half were 30% higher than in the pre-pandemic period of
FY19, including the benefit of transferring sales from closed
stores as we successfully rationalised our store estate, as well as
underlying sales growth.
Customer satisfaction scores improved further during the first
half, against the world class levels reported last year, and the
business increased its mix of sales to trade customers to 59% (H1
FY22: 58%). Trade customers are key as they provide high levels of
repeat custom and an important link to homeowners, through
recommendation and direct sales.
Whilst gross profit has been rising in recent years following
strong sales growth, gross margin percentage has trended down as a
result of cost inflation, the growing trade customer mix, product
mix and strategic decisions to invest in our customer value
proposition. In the first half, gross margins in Topps Tiles were
lower year on year, however margins improved over the course of the
period as we passed through cost price rises, and as supply chain
pressures have started to moderate or reverse. As a result of these
factors, we expect to see gross margins increase sequentially in
the second half.
Online Pure Play - Pro Tiler Tools and Tile Warehouse
The growth of our Online Pure Play businesses, led by Pro Tiler
Tools, has been very strong. In the first half of this year, Online
Pure Play delivered revenues of GBP10.1 million(1) (H1 FY22: Group
consolidated revenue of GBP1.1 million). Pro Tiler Tools continued
its exceptional growth in the first half and Tile Warehouse
delivered modest sales but is also an important source of future
growth in the medium term.
Commercial - Parkside
Parkside's revenue in the first half was GBP4.6 million(1) ,
down 9.3% year on year, reflecting project delays and lower
business confidence as a result of the wider market sentiment. We
are implementing various business improvement programmes, including
a new CRM system which will support further growth in the business
as the commercial market begins to recover from the pandemic
period.
Summary
The Group's strong revenue performance in the first half
reflects the strength of our brands, the execution of our strategy
and encouraging domestic market conditions. Our continued growth
gives us confidence that we will deliver our market share goal of
'1 in 5 by 2025'(3) ahead of schedule.
The business remains strongly cash generative, with the balance
sheet, cash flows and profitability remaining in line with our
expectations.
As announced in the 2022 full year results, we expect Group
profitability in the current financial year to be weighted towards
the second half. The expected weighting reflects: a significant
year on year increase in our gas expense with the majority of the
increase experienced in the first half due to higher energy usage
over the winter; a normalised holiday pay accrual, with a debit in
the first half of c GBP0.7 million and a credit in the second half
of c. GBP0.7 million; growth of the newer businesses over the
course of the year; and a further easing in cost of goods inflation
as the year progresses, which has already been seen towards the end
of the first half.
Rob Parker, CEO, said: "Our performance across the first half
has been good, with a record period for Group revenues, supported
by like-for-like sales growth in Topps Tiles of 4.3% and an
excellent post-acquisition performance from Pro Tiler Tools.
"The economic outlook remains uncertain but early signs of
easing supply chain pressures, allied to the Group's strong balance
sheet, world class customer service, specialist expertise and
growth strategy give us confidence in our ability to drive value
for all stakeholders over the medium term."
(1) All revenue numbers are stated before accounting adjustments
including revenue recognition and customer returns provisions which
will be included in the Interim Results. Group revenue includes
GBP10.1 million of sales from Pro Tiler Tools and Tile Warehouse in
FY23 compared to GBP1.1 million of sales recognised in in the
Group's consolidated accounts for H1 FY22.
(2) Topps Tiles like-for-like sales is defined as online sales
and sales from Topps Tiles stores that have been trading for more
than 52 weeks.
(3) Refers to Topps' goal of accounting for GBP1 in every GBP5
spent on tiles and associated products in the UK by 2025, thereby
increasing its market share to 20% from approximately 17% in 2019.
In the 52 weeks ended 1 October 2022 the Group's market share
increased to 19.0% (2021: 17.6%)
For further information please contact:
Topps Tiles Plc
Rob Parker, CEO
Stephen Hopson, CFO 0116 282 8000
Citigate Dewe Rogerson
Kevin Smith
Ellen Wilton 020 7638 9571
Notes to Editors
Topps Tiles Plc is the UK's largest specialist supplier of tiles
and associated products, targeting the UK domestic refurbishment
and commercial markets and serving homeowners, trade customers,
architects, designers and contractors from 304 nationwide Topps
Tiles stores, three commercial showrooms and six websites:
www.toppstiles.co.uk , www.parkside.co.uk , www.protilertools.co.uk
, www.northantstools.co.uk , www.premiumtiletrim.co.uk and
www.tilewarehouse.co.uk .
Since opening its first store in 1963, Topps has maintained a
simple operating philosophy -- inspiring customers with unrivalled
product choice and providing exceptional levels of customer
service. For further information on the Group, please visit
http://www.toppstilesplc.com/
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END
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