Q4 Trading Update

Topps Tiles PLC

04 October 2023

 

4 October 2023

Topps Tiles Plc

Q4 Trading Update

Third consecutive year of record sales; FY23 profits in line with market expectations

Topps Tiles Plc ("Topps Group", or the "Group"), the UK's leading tile specialist, announces a trading update for the 52-week period ended 30 September 2023.

Group

Group sales in the year were approximately £263 million¹. FY23 was the third consecutive year of record turnover for the Group, with sales now more than £40 million higher than FY19, the last financial year before the Covid pandemic. Year on year, sales increased by 6.4%¹, which we believe represents a significant outperformance relative to the UK tiling market. The Group will update its market share estimate in its full year results announcement for FY23 once third-party market data is available, but expects to report a strong increase from the 19% reported last year as it moves rapidly towards the early delivery of its goal of '1 in 5 by 2025'².

Group sales grew by 3.2% in the 13 weeks to 30 September 2023. The comparative period in Q4 2022 contained a full contribution from Pro Tiler Tools following its acquisition in March 2022.

Omnichannel - Topps Tiles

Like-for-like sales³ were 3.1% higher in the 52-week period and 1.2% higher year on year in the final quarter. Average sales per store were 30% higher than FY19, as a result of significant underlying sales growth and our successful store rationalisation programme, which has now concluded. As expected, gross margins have increased sequentially through each quarter of the financial year as shipping and product cost inflation moderated.

The world-class customer service delivered by Topps Tiles was recognised again by our customers in the year, with overall customer satisfaction up another 1.6 percentage points to 91.5%.

Online Pure Play - Pro Tiler Tools and Tile Warehouse

Overall, Online Pure Play continues to deliver excellent sales growth, up over 40% in the final quarter of the year, led by the Pro Tiler Tools business which was acquired in March 2022. Sales growth over the whole year, including relevant comparatives from the pre-acquisition period, was approximately 50%, representing an excellent first full year for the business as part of Topps Group.

Commercial - Parkside

As reported in the Q3 trading update, a business improvement plan for Parkside was launched and swiftly concluded in the second half of the year, resulting in an operating cost reduction of c. 35%. As a result, the business moved back into profitability in the fourth quarter. With the business now stabilised, the focus will shift back to consistent profitable growth in the next financial year.

Through Parkside, Pro Tiler Tools and a dedicated contractor team within Topps Tiles, the Group is well positioned to serve the contractor and commercial markets moving forward.

Summary

As expected, sales growth moderated in the final quarter, reflecting the impact on residential RMI spend of the prolonged period of inflation, higher interest rates and the slowing housing market. However, against this market backdrop, we expect to have made strong market share gains, driven by our specialist expertise, broad product offering and world class customer service.

Profitability improved in H2 as expected and adjusted profit before tax for the 52 weeks ended 30 September 2023 is expected to be in line with market expectations⁴. Our cash flow and balance sheet are also in line with our expectations.

Rob Parker, CEO, said: "As we celebrate our 60^th anniversary, we are delighted to have delivered a third consecutive year of record sales in Topps Group, having increased our sales by over £40 million since the pre-pandemic period, reflecting the significant development and diversification of the Group over that time.

"It was also a year of strong strategic progress, in which Topps Tiles continued to take significant market share, Parkside was set-up for profitable growth and Pro Tiler's performance went from strength to strength.  As a result of this progress, we anticipate delivering our goal of '1 in 5 by 2025' significantly ahead of schedule.

"Despite a slowing RMI market, we are confident that our core strengths of leading brands, world class customer service, specialist expertise and a strong balance sheet will enable us to grow sales, profitability and cash generation in the years ahead, delivering value for all stakeholders."

¹ Group sales for FY23 are stated before year end accounting adjustments including revenue recognition, loyalty scheme accounting and customer returns provisions. The FY22 period includes sales from Pro Tiler Tools in the period following acquisition only as per the Group's consolidated accounts.

² Refers to Topps Group's goal of accounting for £1 in every £5 spent on tiles and associated products in the UK by 2025, thereby increasing its market share to 20% from approximately 17% in 2019.  In the 52 weeks ended 1 October 2022, the Group's market share increased to 19.0% (2021: 17.6%).

³ Topps Tiles like-for-like sales is defined as online sales and sales from Topps Tiles stores that have been trading for more than 52 weeks.

⁴ Current market expectations for FY23 as of 3 October 2023 are a range of £11.3 million to £12.3 million of adjusted profit before tax, with a consensus of £11.8 million.

For further information please contact:

Topps Tiles Plc
Rob Parker, CEO Stephen Hopson, CFO	0116 282 8000
Citigate Dewe Rogerson
Kevin Smith Ellen Wilton	020 7638 9571

Notes to Editors

Topps Tiles Plc is the UK's largest specialist supplier of tiles and associated products, targeting the UK domestic and commercial markets and serving homeowners, trade customers, architects, designers and contractors from 303 nationwide Topps Tiles stores, a commercial showroom in London and eight customer-facing websites: www.toppstiles.co.uk, www.parkside.co.uk, www.protilertools.co.uk, www.northantstools.co.uk, www.premiumtiletrim.co.uk, www.warmfloorstore.co.uk www.flooringmaterials.co.uk and www.tilewarehouse.co.uk.

Since opening its first store in 1963, Topps has maintained a simple operating philosophy ‐ inspiring customers with unrivalled product choice and providing exceptional levels of customer service.  For further information on the Group, please visit http://www.toppstilesplc.com/

 

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