Topps Tiles shares tank as weak consumer confidence hits sales growth

(Sharecast News) - Topps Tiles said sales growth over the first nine weeks of the new financial year has moderated due to weaker consumer confidence after a record 12 months for the tile retailer, in which profits jumped by nearly a half. Sales growth since the fiscal year end on 27 September slowed to 3.3%, with retail like-for-like sales rising just 2.0%, though the company said it remained confident in its growth strategy.

The stock tanked in early deals on Tuesday, falling 10.7% to 38.6p by 0817 GMT.

The company, which will see new chief executive Alex Jensen join next week as current boss Rob Parker retires, reported annual group revenues of £295.8m, up 17.5% year-on-year, with like-for-like sales rising 5.3%.

Results were helped by a strong performance in the trade division, which grew 28.3% year-on-year to account for around three quarters of group sales.

Meanwhile, digital penetration continued to grow, helped by its online pureplay brands such as Pro Tiler Tools and Tile Warehouse, as well as Topps Tiles' own omni-channel operations. Digital sales represented 21.1% of sales, up from 18.5% the year before.

Adjusted pre-tax profit was up 46% year-on-year at £9.2m, equating to adjusted earnings per share of 3.43p, up from 2.39p previously.

The company declared a final dividend of 2.1p, up 75% year-on-year, taking the full-year payout 20.8% higher to 2.9p.

"This is a very encouraging set of results, and the team worked hard to ensure each business delivered strongly against the prior year," said incoming CEO Jensen.

Topps Tiles also on Tuesday announced the acquisition of Fired Earth out of administration for £3m, which is says "represents a significant opportunity for the group, strengthening our digital presence and adding a premium brand to our homeowner and trade customer offering."