Profit warning from Topps Tiles as it blames sales fall on slowing economy

● Retailer’s like-for-like revenues fall 2.9% as housing market also slows

Topps Tiles has posted a slump in full-year sales and warned over profits as the retailer pointed the finger at a slowing housing market and a faltering economy hitting demand.

The group said in a trading update yesterday that it expected revenue for the 52 weeks to end-september to have fallen from £215 million to £211.6m after like-for-like sales declined 2.9 per cent over the year.

The decline worsened as the year went on, with same-floorspace sales down 3 per cent in the final quarter of the year amid what Topps Tiles said were “challenging” market conditions.

As a result, the firm said that it expected annual profits to come in at the lower end of market expectations. Shares in Topps Tiles fell 3 per cent.

Group chief executive Matthew Williams said: “The tougher market conditions we first highlighted in Q2 continued into the final quarter and, as a result, we are taking a prudent view on market conditions for the year ahead.”

Last year, the firm notched up comparable sales growth of 4.2 per cent, when housing transactions were on the up ahead of stamp duty changes which came into effect in April 2016.

Topps Tiles has since pointed to a slowing housing market and a more “challenging macro-economic environment”, which have hit its performance.

One analyst said: “A housing market off the boil is not good news for a tiles company”.

However, Williams added that the retailer remains focused on its strategy “of ‘Out Specialising the Specialists’ and are beginning to gain traction with a number of new initiatives.

“We have made progress in the commercial tile market, completing a small acquisition during the period and building more commercial capability internally.

“We will update shareholders on this initiative in more detail at the time of our fullyear results in November.”

The company said its customer service ratings were at record levels over the year “and we continue to build strong customer engagement with our industry leading online visualiser”.

It said that 34 new tile ranges were launched in the past 12 months, with new products now accounting for 9 per cent of its tile sales over the period.

Last year Topps Tiles shrugged off Brexit fears, saying that it was well-placed to outperform the market.

The group, which has about 17outletsinscotland,sawsales benefit from a programme to revamp its stores and ranges.