Topps Tiles PLC (LON:TPT) has blamed uncertainty caused by the UK’s looming general election for weak demand for its products as revenues declined at the start of its current financial year as it reported full-year results.
In its results statement, the FTSE 250-listed flooring specialist said that in the first eight weeks of its current year like-for-like (LFL) revenues had declined by 7.2%, a sharper fall than last year when revenues shrank by 1.8%.
READ: Topps Tiles chief executive steps down
“In line with our past experience, consumer demand has weakened further since the UK general election was called in late October”, Topps added, noting that a reduction in political uncertainty will be key to any improvements in its short-term outlook.
“We expect external events will continue to weigh on consumer confidence for the immediate future”, said chief executive Matthew Williams, however, he pointed out that the group’s “market-leading retail offer and growing commercial operations” will allow it to deliver growth in the medium and long-term.
Topps' gloomy outlook followed a lacklustre set of figures for the year ended 28 September, where the firm reported a flat pre-tax profit of £16mln despite a 1.1% increase in revenues to £219.2mln.
The company’s final dividend was maintained at 2.3p per share, leaving the total dividend for the year also unchanged at 3.4p.
House broker trims target price
Following the results, analysts at Topps Tiles’ house broker Liberum Capital cut their target price for the group to 85p from 95p but retained their ‘buy’ rating on the stock, saying while election uncertainty was hampering performance, a result that brought together “better macro and consumer optimism would give clear upside”.
The broker cut its profit forecasts for the current year by 10% as a result of the sharp decline in LFL revenues, although the group's adjusted profit for the year just ended had slightly edged out their predictions of £15.5mln.
Topps shares sank 10.7% to 58.2p in early trading.