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Topps Tiles expects revenues to be up in first half


Revenues for DIY retailer Topps Tiles are expected to increase 1.8 per cent in the first half of its financial year, according to a trading update published today.

Like-for-like (LFL) revenues for the second quarter ending April 2nd 2011 are now predicted to be up 1.8 per cent year-on-year when preliminary results are released on June 1st.

Total revenues for the year-to-date are likely to be down 2.5 per cent but this is largely down to 2010 containing an extra week, and when restated on a same reporting week basis they should be up 1.5 per cent on the prior period.

Topps Tiles expects to increase its store number from 313 to around 320 by the end of the year and claims to be in a secure financial position.

A statement issued by the retailer said: “The group has now completed the refinancing of its loan facilities and has secured a new committed £75 million revolving credit facility with its existing lenders through to May 2015.

“It is anticipated that a slightly higher cost of borrowing will be broadly offset by a smaller, more efficient loan facility.”

The group predicted an increase in revenues when it produced full-year results last September but although sales increased during that period, profits actually fell over the 52 weeks.

Expansion seems key to the retailer’s plans, as outlined at its last AGM, and this positive start to the year will help reassure investors that it is on the right path.

In a morning note from Espírito Santo Investment Bank, Retail Analyst Sanjay Vidyarthi advised on buying Topps Tiles shares following the update.

Vidyarthi said: “At this stage, we remain comfortable with our FY11 PBT estimate of £17.2 million ((6.3p) which is mid range (consensus £16.5 million-£18.0 million)).

“On our estimates, shares trade on calendar 2011E P/E of 10.9x, having fallen 18 per cent over the past couple of months. We think this reassuring update should provide some support to getting the price back into the 80s, despite the difficult macro backdrop.”

Published on Wednesday 30 March by Editorial Assistant

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