Topps Tiles shrugged off supply chain disruption and rising costs with record revenues in its first half.
The specialist retailer said it had to put up prices at the end of last year, but sales have continued to grow amid strong demand for home improvements.
Revenue rose 16 per cent to £119million in the six months to the start of April, while pre-tax profit jumped 40 per cent to £5.6million.
Budgeting: Topps Tiles has launched an online-only brand ‘which brings everyday low prices to homeowners’, the company’s boss said
Like-for-like sales in the first three months of the year were up 46 per cent compared to 2020, when the UK was in lockdown, but also a quarter higher than during the same period in 2019.
The performance was supported by both tradespeople and homeowners, with trade’s share of revenue remaining unchanged at 58 per cent.
Commercial sales contributed £1million to group revenues, while ProTiler, a tiling supplies business which the company acquired in early March, increased sales by £1.1million.
But, despite the strong sales growth, Topps Tiles said it had to face a new set of challenges in the first half, from a shortage of lorry drivers to rising costs and the war in Ukraine.
‘The financial year started with significant supply chain disruption, including a national shortage of HGV drivers, major logistical issues in the UK’s ports, and a dramatic increase in global shipping costs,’ it said.
‘The global gas price also rose to many times its historical average, directly impacting the manufacturing cost of tiles around the world.
‘As a result, it was necessary to increase selling prices across many of our ranges at the end of the first quarter.
‘In the second quarter, the tragic events in Ukraine increased gas prices still further, and Ukraine itself is a significant global supplier of clay, limiting the supply of raw materials for many tile manufacturers across Europe and pushing more cost inflation into the market.’
Despite price hikes, Topps Tiles said trading had remained at ‘good levels’ in the past couple of months, with like-for-like sales up 5.7 per cent.
In the most recent five weeks, however, sales on a like-for-like basis have been ‘slightly below’ last year, when the company had a ‘very strong period’.
‘The bloom is starting to come off of DIY’s rose,’ noted Matthew Walton, senior retail analyst at GlobalData.
‘Topps is starting to feel the pressure itself as […] like-for-like sales in the last five weeks were negative as the rising cost of inflation encouraged consumers to be more considered with their spend.’
The analytics company forecasts that the overall DIY & gardening market is set to decline in 2022 for the first time in the last six years as inflation eats into people’s finances.
Topps Tiles said it had to face a new set of challenges in the first half, from a shortage of lorry drivers to rising costs and the war in Ukraine
Topps has responded to this changing consumer backdrop by launching The Tile Warehouse, a new online-only brand which targets more constrained shoppers with over 70 per cent of its range being less than £20/sqm.
Topps believes this new offer will appeal to a new customer base, while also allowing its core shoppers to trade down.
Chief executive Rob Parker said: ‘We are pleased to announce the launch of Tile Warehouse, a new online-only brand which brings everyday low prices to homeowners.
‘This builds on the acquisition of Pro Tiler Ltd in March and forms the basis for a new, high growth, online-only sales channel, leveraging our core strengths in product, service and scale.
‘Looking ahead, we are mindful of the growing burden on consumers from inflation and rising interest rates as well as ongoing supply chain challenges, however, we remain confident in our strategy and medium term growth prospects.’
Topps Tiles shares were 3.9 per cent higher at 54p in late afternoon trading on Tuesday. The stock has lost around a third of its value since last June.
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