Tile & wood flooring retail specialist Topps Tiles has warned today that full-year pre-tax profit is expected to dive 23.2 per cent as poor trading continues amid tightened consumer spending.
In the six months ended March 31st 2013, underlying profit is likely to fall to £4.3 million from £5.6 million in the same period last year, while like-for-like (LFL) sales are also expected to decline.
LFLs are set to drop 0.3 per cent over the half year though total revenue is set for a rise, standing at around £87.4 million, a 0.9 per cent year-on-year rise as Topps Tiles continues to invest in stores.
For the full year to September 28th 2013, underlying pre-tax profit is expected to be between £13.3 million and £13.8 million, “within the current range of market expectations”, the retailer said in a statement.
Yesterday, home and DIY retail group Kingfisher reported an 11.4 per cent full-year profit drop while B&Q saw LFLs fall 5.6 per cent, highlighting the continued pressure on the home improvement market.
Matt Piner, Research Director at analyst firm Conlumino, noted that the start of the year had brought “fresh pain” to the sector though said that announcements in last week‘s Budget may relieve the market to some extent.
Piner explained: “The Government‘s new mortgage guarantee scheme may provide some relief in the short term.
“The ultimate wisdom of state interference with house prices is pretty questionable but if, as seems likely, the scheme boosts the amount of house transactions occurring over the next two to three years, the likes of Topps will be better able to stimulate spend among consumers re-decorating new homes.
“However, the fact remains that home improvement spending is a bubble that peaked in 2004 and will continue to deflate as the credit fuelled approach of the past disappears.
“Topps Tiles is one of the better retailers in the sector and its work on improving its offer and cutting costs are admirable.
“Yet, despite this, and the pending assistance assistance from the Government, there will be more more ups and downs ahead.”