Tile & wood flooring retail specialist Topps Tiles has seen underlying profit before tax decline 16 per cent to £4.7 million in its first half, forcing it to revise its profit forecast for the full-year, results released today reveal.
In the 26 weeks ended March 31st 2013, like-for-like (LFL) sales fell 0.2 per cent as consumer confidence weakened and recent trading has seen this trend continue.
In the eight weeks ended March 25th, LFLs dropped 2.6 per cent and Rob Parker, Chief Financial Officer at Topps Tiles, told Reuters that the retailer had cut its pre-tax profit forecast by six per cent to £12.5 million after cost reduction and sales growth failed to spur a turnaround.
“We see a sort of continuation, maybe with a very slight improvement in the rest of the second half and on that basis the numbers probably will come in a little bit softer at around 12.5 million pounds,” Parker told the news agency.
Gross margin improved 0.1 per cent over the half and, despite uneven trading, the company is positive about its position, pointing to long-term investments in upgrading its store portfolio, focusing on an improved marketing strategy and developing its digital presence.
Matt Williams, CEO of Topps Tiles, welcomed the results, adding:” In response to the weaker market conditions we saw across the second quarter, we are implementing a programme of self-help initiatives and significant cost-reduction measures and are pleased with the progress made to date.
“However, we are also mindful of the current trading environment which has deteriorated slightly over the last eight weeks.
“At this early point in the second half, assessing the likely impact on the full-year outcome is difficult, but we continue to be cautious on the like-for-like sales outlook for the remainder of the current year.“
Consumer confidence has struggled over recent months as rising unemployment and low wage growth affect families across the UK, and yesterday Asda‘s Income Tracker found that families‘ disposable income had reached a 12-month low.
However, a decrease in fuel costs and a boost in the housing market are stoking hopes of a recovery and Williams remains cautiously optimistic about the remainder of the year.
“While recent indications of an improvement in the UK housing market give encouragement for the future, it is too early to judge the sustainability of this trend and given the historic relationship between housing transactions and home improvement spend, any impact on trading conditions can be expected to lag a recovery,” he said.
“That said, Topps remains well placed to respond to any sustained increase in housing market volumes.
“Against this backdrop, we will continue to focus on taking further market share as we consolidate our position as the UK‘s number one tile retailer.”