Topps Tiles Plc (LON:TPT) has reported a drop in revenues in its first quarter as the tile seller struggled in the UK retail market.
In an update for the 13 weeks to 29 December, the group reported that like-for-like (LFL) revenues had fallen by 1.4% compared to 3.4% growth the same time last year.
READ: Topps Tiles sees full-year profit drop, current like-for-like sales fall amid ‘challenging’ trading conditions
The group also said it was now trading with 367 stores in its retail segment, down from 371 in the first quarter of 2018, having opened one and closed two stores in the period.
However, the company added that in its commercial segment it was on track to open two new showrooms in the second quarter, taking its total to four.
For retail, the firm also said “almost all” of its customers were now utilising the digital part of its offering.
Matthew Williams, chief executive of Topps, said that the business had performed “robustly” in the quarter despite “a challenging market backdrop and a strong period of performance in the prior year”.
“We remain excited by both the opportunity for profitable growth that our expansion into commercial segment will bring and the continued opportunity to further strengthen our market leading position overall."
The drop in revenues will be more bad news for shareholders after the company reported a drop in its full-year profits in November as it was squeezed by the flagging UK retail market.
At the time the group also warned that Brexit could hit consumer confidence, adding that it was also increasing its inventory of important products to protect against supply chain disruptions.
“Good value” for those who look past short-term, says broker
In a note to clients, analysts at City broker Liberum said the update had shown “an improving LFL trend through the period”, adding that the 1.4% decrease implied “an improvement from -1.9% in the first eight weeks of the period to -0.5% in the last five weeks”.
However, the broker said given the “continued tough trading conditions” it would cut its pre-tax profit forecasts by 3%-4%.
“The strategy continues to deliver outperformance vs. the competition, underpinning Topps' leading market position, and progress in the Commercial division remains encouraging. We do not see any change in the positive longer-term fundamentals and, with the group trading close to its a 5-year historic low PER, we see good value for those willing to look past the shorter-term.”
In early trading Wednesday, Topps Tiles shares were up 0.47% at 64p.