Wilmslow, England, November 28, 2006-- Topps Tiles said its sales are picking up again after a disappointing year. The company said it has been gaining market share and it will benefit from the increasing number of households in the UK.
Topps reported pretax profits stagnant at £39.1m in the 52 weeks to 30 September, a fraction lower than the £39.2m recorded in the previous financial year. This was despite a 3.9% rise in revenue from £173.3m to £180.2m.
The problem was that the sales increase came from new openings. Like-for-like sales slipped 1.8%, although they did pick up as the year advanced.
However, the final dividend is raised from 6p to 6.9p, making a total 10.4p. This is particularly good news for shareholders given that the interim dividend was not increased in view of poorer trading in the first half.
Chief executive Nick Ounstead says that market conditions remain challenging but UK tile market is forecast to grow by more than 15% over the next four years and he claims that Topps is gaining market share. Currently it has only about 21% despite being the market leader.
Already in the new financial year like for like revenue is up 3.3% over the first seven weeks, including a 2.7% improvement in the UK, though it should be remembered that comparable sales slumped 4% in the first half last year, so there is still more leeway to make up.
Topps launched a high profile, mainstream terrestrial television
advertising programme on 23 October and whilst he admits it is early days, Ounstead says he is encouraged by the response so far.
Group sales are 10.3% ahead but again there are factors that take the edge off the figures. Topps now has 100% ownership of the operation in Holland, having bought out the 50% it did not previously own, so a greater proportion of revenue is now coming through from across the Channel.
Revenue in Holland has soared 38.1% and like-for-like revenue there has increased by 25.8% over the past seven weeks.
Topps plans to open 30 new UK stores over the current 12 months and five are already up and running. One new store has been opened in Holland, at Eindhoven.
Ounstead bemoans the fact that the UK still buys fewer tiles per head of population than other European countries, at a level around one third of that of other Northern European countries but sees significant potential for growth.
Factors expected to drive growth include the growing trend to tile rooms beyond the more traditional kitchens and bathrooms, for example in conservatories, a preference for second bathrooms and a wider range of products.
Additionally, household numbers continue to grow faster than the UK population.
While the outlook for Topps is improved, we remain cautious as the chain is still catching up on last year’s poor performance.
