Tough trading conditions meant underlying pre-tax profit at Topps Tiles slipped by 22 per cent year-on-year to £5.6m, reflecting a 4.7 per cent drop in underlying sales in its first half. But chief executive Matt Williams was encouraged by the better-than-expected figures, while a strong start to the second half suggests the tile specialist's ongoing turnaround strategy is working.
Like-for-like sales in the seven weeks to 19 May were up 4.5 per cent – an impressive performance given the continuing pressure on discretionary consumer spending, a low level of housing transactions and the wet spring weather. Mr Williams said that Topps had been taking market share, helped by continued heavy investment in TV advertising aimed at broadening the appeal of the stores to more affluent customers, and offering discounts to trade customers, which make up a third of its business. Efficiency gains from its new warehouse and an increase in the amount of directly-sourced product meant Topps was able to lower prices without hitting gross margin, which held steady at 59.7 per cent.
Broker Espirito Santo expects full-year pre-tax profit of £13m giving EPS of 4.9p (from £13.9m and 3.04p in 2011).
TOPPS TILES (TPT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 35p | MARKET VALUE: | £67.1m | |
| TOUCH: | 34-35p | 12-MONTH HIGH: | 69p | LOW: 22p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 31 | |
| NET ASSET VALUE: | * | NET DEBT: | £46.3m* | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 89.2 | 10.0 | 3.85 | 0.5 |
| 2012 | 86.6 | 5.0 | 1.94 | 0.5 |
| % change | -3 | -50 | -50 | - |
Ex-div: 13 Jun Payment: 13 Jul *Negative equity shareholders' funds | ||||
