Pre-tax profits at Topps Tiles slipped 27 per cent to £27.7 million in the year to September 27.

The tile and wood flooring retailer announced that it will not pay a final dividend for the financial year as it reported that like-for-like sales had deteriorated 5.4 per cent while revenue grew 0.1 per cent, to£208.1 million.

Pre-tax profits were adjusted to reflect non-recurring items including a property disposal gain of£900,000 and a£1.5 million non-cash charge relating to the interest rate hedging the company had in place.

Weak current trading

In the first seven weeks of the new financial year, like-for-like sales have plummeted 18.3 per cent of the new financial year and overall group revenue dropped 13.5 per cent.

Chairman Barry Bester said: “We have delivered a credible financial performance in a tough operating environment. I remain confident that our business will show resilience through this period. We have a very resilient business model and an extremely capable team who are managing the business prudently.

“We have again tightened our cost base for the coming year, reviewed our plans for growth, focused our attention on cash management, and extended our banking facilities. The Board is confident that as a result of these actions the business can withstand a sustained period of weak consumer activity.

“I am confident that we can capitalise on our position as market leader as we trade through the current economic cycle and expect to benefit significantly when consumer confidence returns.”

It said it plans to focus its attention on improvements to its existing estate, and said that in the current economic climate a “more cautious approach to expansion” is appropriate.

In line with expectations

KBC Peel Hunt analyst John Stevenson said the results are “in line with our expectations”.

He added: “Topps Tiles benefits from a low capital intensive, low cost business model, an advantage that becomes more apparent in a tough trading climate. A high level of cash conversion underpins a robust level of free cash flow generation. Indeed, in our ‘stress test’ of the financial model, we believe Topps Tiles would still generate cash beyond a LFL sales decline of 27 per cent, a point which gives us tremendous confidence in the outlook for the business.”

Topps Tiles, which calculates its market share is in excess of 22 per cent, trades through 320 outlets in the UK and 22 in Holland.

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