The rate of the like-for-like (LFL) sales decline at Topps Tiles PLC (LON:TPT) accelerated a little in the retailer’s third quarter.
LFL sales in the 13 weeks ending July 1 were down 2.3% year-on-year, having been down 2.2% in the preceding 13-week period.
READ: First-half profits plunge at Topps Tiles but full-year guidance unchanged
On May 22, the company had indicated that LFL sales were running just 0.2% lower than a year earlier, so clearly, performance tapered off as the quarter wore on, with one back-of-the-envelope calculation suggesting the final six weeks of the quarter had seen LFL sales fall by 4.8% year-on-year.
The UK’s largest tiles specialist said the consumer environment remained weak but it believed it continued to outperform the overall tile market during the quarter.
"Our business has a market leading position, remains well-invested and is in a strong position to capitalise on future growth opportunities as they arise,” said Matthew Williams, the chief executive officer of Topps Tiles.
“We have approximately doubled the size of our addressable market through our expansion into the commercial tile market segment and are focused on leveraging our specialism and competitive advantage across both retail and commercial channels," he added.
Brokers take note of the cautious outlook
One City analyst said the performance would not have been helped by the hot weather, while Liberum Capital Markets trimmed its full-year forecasts, despite the LFL sales performance being broadly in line with its expectations for the second half of the financial year.
“While overall LFLs of -2.3% are broadly in line with our H2 expectation there has been some weakening in recent weeks. Combining this with slightly more prudent store opening and gross margin assumptions, we lower our PBT [profit before tax] forecasts by c.5% across FY18E-20E,” Liberum said while trimming its target price to 90p from 95p.
“While there is clearly uncertainty surrounding market conditions for the remainder of the year, good cost control should provide some support. We also believe Topps' leading, specialist market position leaves it better placed than its rivals to weather the softer trading conditions. We do not see any change in the positive longer-term fundamentals and, with the group trading close to its 5-year historic low PER, we see good value for those willing to look past the shorter-term,” the broker said as it stuck to its ‘buy’ recommendation.
Topps Tiles shares slide again after downbeat trading update. Can't see any reason to buy the shares.
— Rodney Hobson (@RodneyHobson) July 4, 2018
The shares were down 1.8% at 61.9p in the first hour of trading.