Topps Tiles swings to loss in ‘challenging’ market

The flooring specialist suffered a £4m statutory pre-tax loss during the 26 weeks to March 28, on a post-IFRS 16 basis, compared with a £5.2m profit the previous year.

Adjusted pre-tax profit, excluding one-off costs and exceptional items, plummeted 85% to £1.2m.

Sales dropped 3.7% to £106.2m during the period, while like-for-likes slumped 6.1%. Excluding week 26 of its financial year, when the UK went into lockdown amid the coronavirus pandemic, like-for-likes were down 4.3%.

Despite having shuttered all of its stores since those measures were implemented by the government, Topps insisted it had a “robust liquidity position” and had options to raise further funds through asset sales in the event of “extended disruption”.

The retailer said its online revenues had surged to three times pre-pandemic levels, but admitted overall sales were “down significantly” as a result of store closures.

Topps started trials of safe opening procedures last month, with 250 of its locations now offering a click-and-collect service. Half of those shops are also allowing “controlled customer entry”, with social distancing and other protective measures in place to ensure the safety of staff and shoppers.

Topps Tiles stores are 5,000 sq ft on average, but chief executive Rob Parker is confident the retailer will be able to operate its stores amid the coronavirus pandemic and adhere to social distancing requirements.

“One of the key things for us which is worth highlighting is that we have relatively low levels of footfall in our stores,” Parker said.

“A typical store may see around 80 visitors a day at pre-Covid levels, in on average, 5,000 square feet, so its rare for us to see more than a handful of customers at any one time, setting us apart from many other retail businesses.”

He also adds that as a retailer they are “people light”, meaning stores only require a couple of staff members in order to sustain operations. At its peak, the tiling specialist had placed 90% of its staff on furlough - a figure that now stands at around 50%.

The company aims to have 250 stores “fully opened” by the end of this month and the remaining 100 opened by the end of June.

Parker said: “Covid-19 has created a complex and extremely challenging trading environment and I am pleased by the way the group has responded to this crisis so far. We are prioritising the safety of our colleagues and customers, protecting the business and working hard to ensure we emerge from this period in the strongest possible position.

“The strong growth of our online business, the development of a collection-only store model and the encouraging initial customer response to our phased programme of store reopenings, all demonstrate our resilience in the face of the Covid-19 threat.”

Parker added: “Having taken steps to strengthen our financial liquidity over recent weeks we believe our resources are sufficient to address the current challenge. Looking further ahead, as the UK’s leading tile specialist, Topps remains well-positioned as the economy begins to recover.”