Topps Tiles PLC will have felt the chill

By John Harrington / April 03, 2018 / www.proactiveinvestors.co.uk / Article Link

Following a tough 2017, tiles and flooring flogger Topps Tiles managed to turn it around in the final quarter of the year.

In a January trading update, the retailer reported a 3.4% year-on-year jump in like-for-like revenues in the 13 weeks to the end of December.

Topps said the sharp rise in revenue was brought about by its ability to maintain "market-leading margins", further investment in its service offering and a "strong outperformance" from the UK tile market as a whole.

The period represented the first quarter of the current financial year and the group remained cautious over the full-year outcome.

"While we are pleased with the like-for-like sales growth achieved in first quarter, we are retaining our prudent view of market conditions for the year ahead," the company said.

The UK retail market has been hit by higher inflation, an uncertain economic outlook and a slowdown in consumer spending.

After a series of profit warnings leading up to its fiscal 2016/17 results in November, Topps posted a 2.9% drop in like-for-like (LFL) revenue to ?211mln and a 15% decrease in pre-tax profit to ?17mln.

Peel Hunt, which rates the shares a 'buy', was expecting the second quarter to have been tougher than the first in a period that included disruption from heavy snowfall.

"While comparatives weaken from Q1, we do not expect Topps to have been immune from a softer consumer environment, particularly with regards to big-ticket projects," the broker said.

"The snow disruption will also have a negative effect on the quarterly update; a sales drop of 30% in the main snow-disrupted week was not unusual for many retailers, which would knock c1-2% off the quarterly LFL if the lost business wasn't caught up," it added.

Anything better than a 1.4% year-on-year fall in LFL sales would suggest Topps is performing ahead of the broker's expectations, which are for 1% LFL sales growth in the full financial year.

"While we remain cautious on the outlook for home-related projects and associated spending, we have no concerns over forecasts," Peel Hunt concluded.

The snow will also have affected the UK construction industry, so do not expect a sparkling purchasing managers' index (PMI) survey result from the sector.

RBC Capital Markets says that with news order in the sector contracting, it expects the headline reading to ease to 51.0 from 51.4.

Significant announcements expected

Trading update: Topps Tiles (LON:TPT), Renewi PLC (LON:RWI)

Finals: Concurrent Technologies PLC (LON:CNC), Maxcyte PLC (LON:MXCT), Next Fifteen Communications PLC (LON:NFC)

Traffic numbers: Wizz Air PLC (LON:WIZZ)

Economic data: UK construction PMI survey; US ADP employment report; US factory orders; US ISM non-manufacturing index


 

Recent News

Gold stocks decline on flat metal and mixed equities

October 07, 2024 / www.canadianminingreport.com

Copper price expected to range from flat to slight gain in 2025

October 07, 2024 / www.canadianminingreport.com

China's gold holdings to central bank reserves still low

September 30, 2024 / www.canadianminingreport.com

China has broad effect on gold market

September 30, 2024 / www.canadianminingreport.com

Gold stocks mixed after previous week's huge gains

September 23, 2024 / www.canadianminingreport.com
See all >
Share to Youtube Share to Facebook Facebook Share to Linkedin Share to Twitter Twitter Share to Tiktok