Despite a pronounced fall in first-half profits, the board at Topps Tiles (TPT) is standing by its full-year guidance. Somewhat predictably, the retailer cited an early Easter and "adverse weather" conditions (when better to redecorate your bathroom?), but the decline in reported profitability had more to do with a disproportionate increase in distribution and admin costs, together with a 90-basis point reduction in the "industry leading" gross margin.
The second quarter was particularly challenging for Topps, with like-for-like sales falling 2.2 per cent, compared with 3.4 per cent growth in the opening period. That left underlying sales pretty much flat at the halfway point, which led to adjusted pre-tax profit of £7.2m (from £10.1m in FY2017).
But the group is now entering a period of weak comparatives, with like-for-like sales over the seven weeks ended 19 May 2018 basically flat compared with a 5.8 per cent fall this time last year. Even better, fewer investments allowed free cash flow to more than double to £6.8m year on year.
Analysts at Liberum still expect pre-tax profit of £15.5m for the year ending September 2018, giving EPS of 6.3p, compared with £18.6m and 7.7p in FY2017.
| TOPPS TILES (TPT) | ||||
| ORD PRICE: | 72p | MARKET VALUE: | £139m | |
| TOUCH: | 72-73p | 12-MONTH HIGH: | 103p | LOW: 60p |
| DIVIDEND YIELD: | 4.7% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 13p | NET DEBT: | 103% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 107 | 9.5 | 3.9 | 1.10 |
| 2018 | 111 | 6.4 | 2.7 | 1.10 |
| % change | +4 | -33 | -31 | - |
| Ex-div: | 07 Jun | |||
| Payment: | 13 Jul |
