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Topps Tiles launches new online-only business as it reports record first-half sales – but says supply and labour challenges continue

Topps Tiles is right sizing its store estate while investing online. Image: AVM Images/Shutterstock.com

Topps Tiles is right sizing its store estate while investing online. Image: AVM Images/Shutterstock.com

Topps Tiles today launches a new pureplay tile retailer as it reports record turnover in the first half of its financial year. It says Tile Warehouse will offer competitive prices to a new group of customers – “value conscious” homeowners – while complementing its core Topps Tiles brand and drawing on existing group infrastructure and expertise. It also represents the start of a new online-only business within Topps Tiles. Topps says it will invest in digital marketing for the business and expects it to be “modestly loss making” in the early years.

At the same time, Topps Tiles has expanded its trade business – acquiring Pro Tiler in March during a half year in which commercial revenue grew by 24% to £5m.

The retailer now wants to lead the tile market for sustainability, and aims to be carbon neutral in scope 1 and 2 emissions by 2030.

However, it points to a range of challenges during the first half, from supply chain disruption to the effects of war in Ukraine.

The financials

Today’s update comes as Topps Tiles today record first-half turnover of £119.2m in the six months to April 2 2022. That’s 15.5% up on the previous year. Pre-tax profits of £5.6m are 40% up from £4m a year earlier.

In the first seven weeks of the second half, like-for-like sales grew by 5.7%. In the most recent five weeks, like-for-like sales were slightly below the same time last year – which followed the end of the third UK lockdown, in which non-essential shops had to close.

Topps Tiles chief executive Rob Parker says: “The group has delivered record first-half revenues against a backdrop of continued robust demand for home improvements. While supply chain and inflation headwinds strengthened in the period, we are managing these challenges effectively overall and believe we remain well positioned relative to many of our competitors.

“We have continued to develop the Topps Tiles brand, enhancing our store portfolio and introducing a number of new developments to our award-winning website to further strengthen our omnichannel capability. 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.”

Multichannel strategy

Over the first half of the year, Topps added a partnership with Dulux to its room visualiser, halved page load speeds and added more credit options to its checkout. It also expanded its social media presence with a TikTok channel.

By the end of the period, Topps Tiles had 312 Topps Tiles shops. It is working to a long-term ‘right size’ target of 300, down from 372 at the end of 2017. Of those shops, 31 are Topps Tiles superstores, 14 are clearance stores, and the balance are core stores. Over time it expects to shift the balance to have more superstores, although the numbers remain under review.

Supply chain disruption

Topps Tiles says the first half has been marked by issues including a national shortage of HGV drivers, logistical issues in UK ports and a “dramatic increase” in global shipping costs. At the same time, rising gas prices affected the cost of making tiles around the world and the retailer has had to increase the selling prices of many ranges. It says that economic pressures on some tile producers have been so severe that “in some cases factories have reduced or paused manufacturing”.

Topps says availability of labour has been a significant challenge in the first half of the year. “Although the level of staff absence due to Covid-19 has been falling across the first half, our vacancies were higher than we would have liked, reflecting the declining size of the UK workforce set against an economy which was still expanding, and for some people a reassessment of their career choices following the disruption of the last few years,” it says in today’s statement. “Our turnover of staff has normalised back to pre-Covid levels, but the challenge of recruitment and retention will remain for some time to come.”

The war in Ukraine has added to challenges, both because the country is a significant supplier of clay and because of the continued rise in gas prices. In response, Topps Tiles has increased its stockholding to £35.6m at the half-year point, from £32.8m at the end of the previous year.

Sustainability

Topps Tiles says all of its electricity now comes from renewable sources, and it is trialling its first LNG truck. It has also signed up to the WRAP UK plastic pact to eliminate or reduce plastic waste.

Topps Tiles is ranked Top100 in RXUK Top500 research.

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