Improved sales gives Topps the confidence to spend

TOPPS Tiles, the retailer whose head office functions are based at Handforth in Cheshire, said pre-tax profits in the six months to April 2 increased by 35% to £10m on the back of healthier like-for-like sales.

Revenues were £89.2m, which is a drop on the £91.4m last year. However, last year’s figures included 27 weeks’ trading and this year’s was 26. On a same-week reporting basis, sales were up 1.5% and like-for-like sales were up 1.8%.

Chief executive, Matthew Williams, said: “I consider this to have been a robust performance, in light of the prevailing economic conditions and in comparison to our sector peers.  

“We are encouraged with these results, which demonstrate growth in like-for-like sales and gross margin over the period, and are in line with management’s expectations.  We remain committed to our strategy of delivering outstanding value and service to our customers which will enable us to retain our market leading position.”

He said that continuing like-for-like sales growth had given the firm the confidence it needed to continue investing in the business and its infrastructure.

For instance, its first-half costs were comparatively higher due largely to a £1.3m advertising campaign on TV to boost sales, while capital expenditure rose sharply to £5.4m (2010: £1.5m).

This was due partly to the opening of three new stores during the period, bringing its total to 312. It has also spent £1.6m purchasing a freehold property and a further £1.6m on the construction of new warehousing next to its operational base in Leicestershire.

This will provide extra capacity ahead of a planned rollout where Topps is targeting the opening of a net 10 new stores each year.

“We are continuing to manage the business by balancing short term constraints with longer term opportunities,” said Williams.

“Like-for-like sales growth across the period has given us confidence to continue investing in infrastructure to drive longer term growth and to increase marketing spend to continue to promote our brand.”

He added that although the economic environment remained subdued and consumer spending was cautions, the firm was “confident that we will continue to deliver our financial and operational objectives”.

Improved trading has also helped to pay down debt, which stood at £50m by April 2, compared with £57.7m a year ago. Topps also agreed a renewal of its £75 banking facility during the period.

The company’s improved performance has also meant that Topps’ board have proposed the re-introduction of an interim dividend of 0.5p per share.