Topps Tiles Plc (LON:TPT) shares gained as it reported a return to like-for-like sales growth at the start of the new financial year after 2017 profits and revenues declined.
In the year to 30 September 2017, adjusted pre-tax profit fell 15.5% to £18.6mln and revenue dipped 1.5% to £211.8mln amid “challenging trading conditions”.
READ: Topps Tiles' shares drop as it again warns on full-year profit with market conditions still "challenging"
Like-for-like sales for the year dropped 2.9%, compared to a 4.2% increase in 2016 as consumer confidence in the UK fell after the Brexit vote and housing transactions fell 5% to 1.2mln.
The fall in house sales followed a spike in March last year ahead of an increase in stamp duty for second home purchases and Buy-to-Let properties.
However, like-for-like sales in the first eight weeks of the new fiscal year rose 3.2%.
“While we are retaining our prudent view of market conditions for the year ahead, we are encouraged by this return to like-for-like sales growth,” said chief executive Matthew Williams.
“We are confident that the combination of the significant further potential in our strategy of ‘Out-specialising the Specialists’ with our accelerated plan to grow in the commercial tile market will underpin our future success."
Gross margins fell to 61.1% from 61.9% last year as the Brexit vote pushed the pound lower and sent the cost of imports for materials higher.
READ: Topps Tiles warns full-year results will be at the lower end of expectations as it reports a decline in first-half profit
In response, the company cut costs with operating expenses falling 0.5% to £112.1mln. For the year ahead Topps Tiles expects adjusted operating costs of between £116mln and £117mln.
“The business responded well to the more challenging trading conditions we experienced in 2017, maintaining tight control of costs to help offset the reduction in gross margin and continuing to make good progress with its strategic initiatives,” said Williams.
The company recommended a final dividend of 2.3p, down from 2.5p last year.
Shares rose 7.0% to 65p in morning trading.