Topps Tiles is to focus on the customer experience both online and in-store as it targets the goal of taking £1 in every £5 spent on tiles in the UK by 2025.
The retailer, ranked Top150 in RXUK Top500 research, says its 342 stores will remain at the heart of its multichannel strategy, operating alongside a recently relaunched website that saw online sales treble during the first Covid-19 national lockdown. It has benefited from the rise in ecommerce activity seen in the DIY category this year as shoppers turned to home improvements while working from home or furloughed. It also says that although it has seen more demand from homeowners this year, more than half (55%) of its retail sales continue to be to trade customers.
The update came as Topps Tiles reported group revenue of £192.8m in the year to September 26 2020. That’s 12% down on the previous year, and like-for-like sales – which strip out the effect of store openings and closures – were down by 12.5%. This, said the company, mostly reflected the impact of the Covid-19 pandemic, including the period when its stores were forced to shut during the first UK-wide lockdown. The retailer reported a pre-tax loss of £9.8m, from a profit of £12.5m a year earlier. But in the first eight weeks of its new financial year, like-for-like sales grew by 19.6%, contrasting with the same period in 2019 when sales fell by 7.2%.
During the year the retailer sold and leased back its head office and warehouses for £17.9m, and that has helped move it from the position of having net debt of £11.3m at the beginning of the year to cash of £26m at the year end. The retailer also took support through the government’s coronavirus job retention scheme, though it stopped doing so in early August.
Topps Tiles chief executive Rob Parker says: “In what has been a very challenging year, I am pleased with our response as a business, in the resilience we have shown and, in particular, the strong bounce-back in retail sales delivered since the initial national lockdown.”
He added: “During the year we have transformed our balance sheet and have accelerated our strategic development, building on our credentials as the UK’s leading tile specialist. We are ambitious for the business and have set ourselves a new goal of taking £1 in every £5 spent on tiles and associated products in the UK by 2025.
“It has been a year of challenge and change for Topps but we are emerging stronger and refreshed. Our new financial year has begun strongly, with retail like-for-like sales in the first eight weeks ahead by 19.6%. With our true omnichannel offer, specialist credentials and strong financial footing, Topps is well-positioned for growth as the UK economy begins to recover.”
Topps cites Mintel figures that put the value of the UK tile market at £375.5m in 2019 and project a 23.9% fall in value to £285.8m in 2020 - but says that the strong level of demand currently win seen in the domestic sector means those figures are likely to be revised up in the future. “The market is currently more buoyant than the metrics suggest,” it says in today’s full-year report, adding, “however the sustainability of this trend is hard to forecast.”
The retailer closed all of its stores using the first lockdown, but, since it traded in the essential retail category was able to slowly reopened them as it put safe working practices in place. While stores were closed it relied on its website, relaunched in October 2019, for sales that trebled during that period. Almost all of its customers use its website at some point during the buying journey, but 90% also visit a store. “We are very focused on offering our customers a true omni-channel experience and our new website has now made this possible – customers can choose which channel they utilise during their journey – and can change seamlessly between them as they wish,” said Topps in today’s full-year statement.
Despite its investment in online, Topps says its stores remain a “key source of competitive advantage,” because they are close to most of the UK population. It has closed 24 shops during the last year and opened four and expects that there will be “modest reductions” in its store portfolio in the future.
Topps says it relied on the strength of its supply chain more than it ever had during the year. Many of its suppliers were also experiencing disruption during the first lockdown, and it worked with them to make sure it would still get access to products - needed more than ever when demand recovered to “exceptionally robust” levels. It said: “We believe the strength of our supply chain and strategic relationships with manufacturers have enabled us to stay ahead of our competitors in terms of product availability through this period. Our strategic supplier base accounts for 80% of our purchases.” That’s up from 70% a year earlier.
During the year it launched 32 new product ranges, collaborating on the design of about 35% of those ranges. It has also focused on sustainability, increasing the proportion of recycled content used in its tiles and working with one supplier to support the production of 98% recycled tiles.
As of year-end in September Topps held inventory worth £29.3m – equivalent to 134 days turnover – but said that did not include any extra stock held against future potential import delays as a result of Brexit. Ahead of the October 31 2019 Brexit deadline it held stock worth £1.1m.