(Sharecast News) – Tile specialist Topps Tiles said on Wednesday that the latest lockdown is expected to impact sales, while trading margins will come under some pressure due to the additional delivery costs associated with more online sales.
The company said retail like-for-like sales rose 19.9% in the first 13 weeks of the current financial year, compared to a 5.4% decline in the same period a year ago, with good growth in sales across both of its main customer groups, professional fitters and homeowners.
Topps, which has been advised under current lockdown rules to close its tile aisles in stores to prevent browsing, said it expects sales and margins to take a hit. Customers will be able transact at the trade counter or through the company’s online channel with direct delivery or click & collect.
The group said the markets served by its commercial business are seeing a more protracted recovery from the impact of Covid-19 when compared to that witnessed in domestic repair, maintenance and improvement markets. However, it expects to make progress within the commercial segment this year.
Topps said the performance of its commercial division is in line with its plans and the company remains committed to its strategy of “disrupting the commercial market and constructing a market leader over the medium term”.
Chief executive officer Rob Parker said: “While the latest lockdown restrictions will impact sales, at this stage it is very difficult to estimate the level of impact or how long this may last.
“The business remains well funded, is debt free, has a market leading offer and a clear strategic focus on achieving our goal of ‘1 in 5 by 2025′. The combination of these factors gives me confidence that Topps is well-positioned for growth as we emerge from the restrictions of the pandemic and the economy recovers.”
Park is referring to the company’s goal of accounting for £1 in every £5 spent on tiles and associated products in the UK by 2025, increasing its market share to 20% from around 17% currently.
Broker Peel Hunt said Topps’s sales growth of 19.9% was ahead of its 15% forecast.
“While tighter restrictions will impact sales, even if Topps books -5% in for Q2, it can still hit our H1 sales forecast thanks to the Q1 outperformance, so we see no reason to change forecasts at this time; indeed with consumers’ focus on the home likely to continue, we remain upbeat,” it said.
“Regardless of short-term sales, Topps’ market position, strategy and balance sheet strength underpin strong profit recovery over the next three years.”
