Topps Tiles' profits drop 50% in tough economic times
Half-year profits at retailer Topps Tiles have fallen by 50% compared with the same time last year due to tough economic times and falling customer numbers, the firm has said.
Topps Tiles reported pre-tax profits of £5m in the 26 weeks to 31 March, falling short of analysts' expectations of £6.8m.
The company reported a 4.7% drop in like-for-like sales.
Topps added that it expected trading conditions to continue to be difficult.
"We expect trading conditions for retailers in the discretionary spend sector to remain challenging during the second half," said Topps Tiles chief executive Matthew Williams.
Seymour Pierce stockbrokers said new competition posed a continuing threat for the Leicester-based group, but it still expects Topps, the UK's largest tile and wood flooring retailer, to hit full-year profits of £13m, as forecast.
"We remain concerned that the DIY sheds, in particular B&Q, which has recently launched a new tile range, and other retailers, which are improving their 'Home' offers, will start to impact Topps' revenues," said Seymour Pierce analyst Freddie George.
The company, which also trades as Tiles Clearing House, has experienced a 4.5% boost in sales in the past seven weeks due to bad weather in April, which triggered an increase in home repairs.
However, Mr Williams said it was too early to predict whether this signalled a turnaround in the home improvement market.
Topps, which has opened a second warehouse at its Leicestershire headquarters, is aiming to improve profit margins by purchasing more of its products directly from its manufacturers.
The tile specialist, which has a 26% share of the market, also plans to expand to a chain of about 400 stores in the UK from the current total of 320.