Shares in Topps Tiles (LON:TPT) fell after the tile specialist reported a drop in full-year sales with Q4 trading impacted by heatwaves. However, the home improvement retailer said like-for-like sales improved in September.
And combined with recent cost-cutting measures, this uptick gave management the confidence to maintain FY26 profit guidance. As at 30 September, consensus called for adjusted pre-tax profits of £6.6 million, with a range of £6.5 million to £6.7 million.
Feeling the heat
For the year to 26 September, group revenue declined 1.3% to £292 million. This drop reflected challenging market conditions, the annualisation of prior-year CTD store closures as well as the shuttering of underperforming Topps Tiles stores.
Topps Tiles delivered resilient like-for-like revenue down by roughly 0.1%. This was a pretty decent performance considering that Q4 trading was affected by extreme heat, which disrupted activity among UK housebuilders and traders.
Outperformance persists
For Topps’ long-suffering shareholders, the encouraging news is like-for-like sales picked up in September. And the company continued to outperform a subdued wider home improvements and DIY market, which declined by 1.7% over the financial year.
| Year to September | FY25A | FY26E | FY27E |
| Revenue (£m) | 296 | 293 | 298 |
| Earnings per share (p) | 2.16 | 2.50 | 3.61 |
| Dividend per share (p) | 2.9 | 2.9 | 2.93 |
Source: Stockopedia
Topps Tiles reported a year of record sales for its Pro Tiler Tools business, with revenue rising 18.2% to roughly £42 million, not to mention increased sales through its online channels.
The group also completed its cost-saving and store optimisation programme and continued to expand its product offering into additional hard-surface categories. Furthermore, the acquired premium brand Fired Earth proved ‘profit accretive’ last year.
We think Topps Tiles deserves credit for continuing to outperform a tough market. The company has reduced its cost base and strengthened its trade proposition through a new app that has already achieved over 46,000 downloads.
According to Stockopedia, Topps Tiles trades on roughly 10 times forecast 2027 earnings and offers a tasty 8%-plus yield. But the shares are cheap for a reason and we would avoid Topps Tiles for now.
Consumer confidence remains frail and it could be a while before the UK housing market turns, which suggests there could be further downgrades to come.
