Topps Tiles PLC (LSE:TPT) saw its first-half revenue rise to a new all-time high, following on from record-breaking performances in 2022 and 2021.
In a trading update, the tiles retailer reported revenue of £130.5mln in the 26 weeks to 1 April 2023, 9.5% higher than the prior year, with approximately £9.0mln of revenue growth related to the acquisition of Pro Tiler Tools and the launch of Tile Warehouse in 2022, both online businesses.
Following a strong first quarter, the core Topps Tiles business continued to deliver good sales growth in Q2, with like-for-like sales 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 £115.8mln, a record for the business as a standalone brand.
Whilst gross profit at the Topps Tiles business 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 its 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 the company passed through cost price rises, and as supply chain pressures have started to moderate or reverse. As a result of these factors, Topps Tiles expects to see gross margins increase sequentially in the second half.
The company said overall its business remains strongly cash generative, with its balance sheet, cash flows and profitability remaining in line with expectations.
As announced in its full-year 2022 results, Topps expects group profitability in the current financial year to be weighted towards the second half.
In the update, Topps Tiles' CEO Rob Parker 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."
He added: "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."
In morning trade on Wednesday, shares in Topps Tiles were 3.25% higher at 48p.