Topps Tiles Plc (LON:TPT) has reported a drop in full-year profit and a decline in current like-for-like sales amid ‘challenging’ trading conditions, with the retailer also preparing for Brexit-related disruption.
The UK’s largest tiles specialist saw its adjusted pre-tax profit fall to £16.0mln for the 52 weeks ended 29 September 2018, down from £18.6mln a year earlier, with the reduction due to additional costs as a result of new stores and inflationary pressures.
READ: Topps Tiles shares soar on profit uplift after strong summer
It said group revenue in the period increased by 2.4% to £216.9mln, ups from “211.8mln a year earlier, although like-for-like sales and margins were both flat.
The firm added that, in the first eight weeks of its new financial period, group like-for-like revenues were down by 1.9%, versus an increase of 3.2% at the same stage in 2017.
Matthew Williams, Topps Tiles’ chief executive commented: "At the start of the new financial year, trading conditions remain challenging and like-for-like sales in the first eight weeks have been negative against a strong prior year comparator.
“Whilst retaining a cautious view on the outlook, we remain confident that our expansion into the commercial tile market, coupled with our market-leading retail operation, gives us a solid platform for future growth."
Topps Tiles maintained its final dividend at 2.3p, making an unchanged total payout for the year of 3.4p per share.
The group said it will increase the inventory of its important products to protect against supply chain disruptions from Britain's exit from the European Union.
But it warned that Brexit could hit consumer confidence, resulting in lower sales and also lead to staffing issues from a smaller labour pool.
Longer term prospects remain intact
In a note to clients, analysts at Liberum Capital said: “At this stage, we leave our FY19E-21E P&L forecasts unchanged. Topps' leading, specialist market position leaves it better placed than competitors and the group's longer-term growth prospects, including within the UK commercial tile sector, remain very much intact.
“The shares trade close to a 5-year historic low PER and we see good value for those willing to look past the shorter-term.”
Liberum reiterated a ‘buy’ rating and 95p price target on Topps Tile shares.
In late morning trading, the stock was changing hands at 65p each, down 1.5% on Monday’s close.
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