Q4 Trading Update

RNS Number : 7852B

Topps Tiles PLC

05 October 2022

 

5 October 2022

Topps Tiles Plc

Q4 Trading Update

A second record year for sales; full year profits towards upper end of market expectations

Topps Tiles Plc (or the "Group"), the UK's leading tile specialist, announces a trading update for the 52-week period ended 1 October 2022.

Group Summary

The Group has developed and diversified in recent years and now operates across three business areas: our omni-channel Topps Tiles brand is the clear market leader in the UK and offers specialist product expertise and world-class customer service to trade and homeowner customers; our Online Pure Play offer consists of Pro Tiler Tools and Tile Warehouse; and, finally, our Parkside brand works directly with architects, designers and contractors in the commercial market.

Group sales in the 52-week period were approximately £247.3 million¹, a second consecutive record year of turnover, with year on year sales growth of 10.6% on a comparable 52-week basis².  Group sales in the 13 weeks to 1 October were 4.3% higher year on year³, with positive progress from all parts of the Group.

Summary of year-on-year sales growth	Q43	FY2
Topps Tiles (like-for-like sales)	(1.2)%	+9.4%
Online Pure Play (Pro Tiler Tools and Tile Warehouse - total sales)4	+46.1%	+34.3%
Commercial (Parkside - total sales)	+39.9%	+28.6%
Group (total sales)1	+4.3%	+10.6%

Topps Tiles brand

Topps Tiles continues to perform well against a very strong comparative period last year.  Like-for-like sales were 1.2% lower than last year in the final quarter, with the underlying like-for-like sales trend similar to that reported in the Q3 Trading Update.  Like-for-like sales growth for the full year in Topps Tiles was 9.4%.

Average weekly sales per store in Topps Tiles this year are 25% higher than in the pre-pandemic period of FY19.  Around half of this growth is due to the transfer of sales from closed stores as we successfully rationalised our store network and improved store sales densities, with the remainder due to underlying sales growth, including particular strength in trade sales.

Trade customers are key to the business's resilience and growth as they provide repeat custom and high levels of customer lifetime value, as well as a crucial link to our homeowner customers.  Our trade customer base has grown steadily over recent years, and has continued to increase over the period:

	FY15	FY19	FY22	Q4 FY22
Trade customers: % of sales in the Topps Tiles brand	50%	56%	59%	60%

Online Pure Play - Pro Tiler Tools and Tile Warehouse

Pro Tiler Tools, acquired in March 2022⁵, is clearly focused on trade customers and has continued its strong sales growth trajectory since acquisition, with sales in the most recent quarter up 43.0% year on year⁶.  Pro Tiler Tools, alongside our newest brand, Tile Warehouse, launched in May 2022, form an increasingly strong Online Pure Play offer.

Commercial - Parkside

Parkside, which is focused on architects, designers and contractors in the commercial market, continues to deliver good levels of sales growth, with year-on-year revenue up 39.9%³ in the final quarter and 28.6%² in the year overall, significantly outperforming the market.  In the final quarter of the year, the business has moved to breakeven levels of profitability and is expected to deliver a positive contribution to the Group's profitability from FY23 onwards.

Group Profit, Cash and Balance Sheet

Overall, the Group's adjusted profits for the year are expected to be towards the upper end of market expectations⁷.

The Group has a positive net cash balance of approximately £15.9 million at year end, with no borrowings.  We are in the final stages of renewing our £39.0 million Revolving Credit Facility, which is currently committed until summer 2023.  This will be replaced with a new £30.0 million facility, which will be committed until autumn 2025 with an option to extend for a further two years.  The new facility will contain a slightly favourable margin structure compared to our existing facility and is expected to complete shortly.  This new facility demonstrates the support of our banking partners and maintains our significant balance sheet strength as we continue to invest in growth.

Rob Parker, CEO, said: "We are delighted to have delivered a second successive year of record sales for the Group, with profits expected to be towards the upper end of market expectations.  All parts of the Group contributed to this performance and are making good strategic progress as we develop and diversify the business.

"Our market leading omni-channel retail business, Topps Tiles, has performed well against strong prior year comparatives and we are continuing to grow our base of loyal trade customers.  Our expansion into the commercial market through our Parkside brand is now generating in excess of £10 million of sales, and we expect it to be profitable moving forwards.  This year we have further expanded our activities into online pure play through the acquisition of Pro Tiler Tools and the creation of Tile Warehouse - both of which present further opportunities for profitable growth. 

"The Group has worked hard to achieve a strong balance sheet with positive net cash and this will serve us well as we move into a period of macroeconomic volatility, leading to a more uncertain environment for consumers.  In this context, our 20% market share goal of '1 in 5 by 2025' and our growth strategy to deliver this will remain our primary focus, and we are confident that we will deliver against them both."

¹ Before year end accounting adjustments including revenue recognition and customer returns provisions. Includes sales from Pro Tiler Tools in the period following acquisition only as per the Group's consolidated accounts.

² Compared to a pro rated 52 week period last year - the last financial year contained 53 weeks.

³ Compared to a pro rated 13 week period last year - last year's reported Q4 contained 14 weeks.

⁴ Year on year growth for Pro Tiler Tools and Tile Warehouse have been compared here to the relevant pre-acquisition period for Pro Tiler Tools in 2021 to give a meaningful comparison.

⁵ 60% of the share capital of Pro Tiler Limited was acquired in March 2022, with options in place to acquire the remaining 40% in March 2024.

⁶ Year on year growth for Pro Tiler Tools (only) has been compared here to the relevant pre-acquisition period for Pro Tiler Tools in 2021 to give a meaningful comparison.

⁷ Market expectations for adjusted profit before tax for the 52 week period ended 1 October 2022 are in the range £13.8 million to £15.4 million, with a consensus of £14.6 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 refurbishment and commercial markets and serving homeowners, trade customers, architects, designers and contractors from 304 nationwide Topps Tiles stores, four commercial showrooms and six websites: www.toppstiles.co.uk , www.parkside.co.uk , www.protilertools.co.uk , www.northantstools.co.uk , www.premiumtiletrim.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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