Topps Tiles Plc (LON:TPT) saw its shares drop over 5% this morning after it warned its full-year results will be at the lower end of expectations as it reported a decline in first-half profit in the face of tough comparatives and weaker macro indicators.
The tiles manufacturer and retailer said its pretax profit for the 26 weeks to April 1 fell to £9.5mln, down from £10.1mln a year earlier, as revenue slipped to £106.6mln from £108.0mln.
The group said its like-for-like revenue declined by 1.9% year-on-year, against 4.6% growth in the previous year.
Topps Tiles said its revenue faced a tough comparative period the year before when sales benefited from changes to UK stamp duty, which it said is also creating a tough comparator for the second half.
The group added that its like-for-like sales in the seven weeks to May 20 were down 5.8% year-on-year.
As a result, Topps Tiles added, it now expects full-year pretax profit to be at the lower end of current market expectations of between £21.0mln and £22.1mln.
In reaction, shares in Topps Tiles were 5.6%, or 5.75p lower at 97.25p.
More challenging macro-economic environment
The firm’s chief executive, Matthew Williams said: "Our results for the first half reflect the more challenging macro-economic environment we have traded through so far in 2017 and the strong performance we delivered in the corresponding period in 2016 when housing transactions were boosted ahead of the changes to stamp duty.
“While these tougher comparatives begin to ease from the end of June, the key macro indicators for our market are weaker year-on-year and we are taking a prudent view of the second-half prospects."
However, he added: "Against this background, we remain confident in the longer-term outlook for the business, as evidenced by the 10% increase in the interim dividend.”
Topps Tiles increased the half-year payout to 1.1p, up from 1.0p the year before.
The group also revealed that its recently completed analysis of the UK commercial tile market has "confirmed it as attractive", leading it to evaluate "a number of small acquisition opportunities".