Topps Tiles: improved second half results

Topps Tiles Plc, the UK’s largest tile and wood flooring specialist with 324 stores, announces its annual financial results for the 52 weeks ended 29 September 2012.

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Highlights:

52 weeks ending 29th September 2012 / 52 weeks ending 1st October 2011

Group revenue: £177.7m /£175.5m
LFL revenue: -0.7% / -2.0%
Gross Margin: 60.0% / 59.6%
Operating Profit: £15.5m / 14.0m
Adjusted operating profit(2): £16.6m / £18.2m
Profit before tax: £12.5m / £7.9m
Adjusted profit before tax(3): £12.8m / £13.9m

Notes:
1) LFL revenues defined as sales from stores that have been trading for more than 52 weeks
2) 2012 adjusted operating profit excludes several items we have incurred during the period due to their nature, these are: the impairment of plant, property and equipment of £0.5m (2011: £1.1m), business restructuring costs of £0.4m (2011: nil), an increase in property related provisions of £0.2m (2011: £1.9m), 2011 also included an inventory charge of £1.3m for which there is no equivalent charge this year.
3) 2012 adjusted profit before tax is adjusted for the effect of the items above plus:
- property disposal gain of £1.6m (2011: nil)
- £0.8m charge relating to the interest rate derivatives and forward currency contracts the Group (defined as Topps Tiles Plc and all its subsidiaries) has in place (per IAS39) (2011: £1.6m charge)

* Focus on strengthening our market leading position by improving customer service, enhancing the product range and maximising sales opportunities in a tough retail environment
* Significantly improved second half performance, with LFL sales increased by 3.5% (2011 H2: -5.8%) and adjusted profit before tax of £7.2m (2011: £6.9m)
* Market share increased to 27% (2011: 26%) reflecting successful strategy of inspiring customers’ home improvement projects and increased focus on trade customers
* Targeted development of store estate, with net 5 new Topps Tiles stores opened, including 13 new locations and 10 Tile Clearing House stores converted to the more profitable Topps format
* Further development of online capability and sustained marketing expenditure to drive store footfall and build greater brand awareness
* Gross margin increased to 60.0% (2011: 59.6%) reflecting further supply chain efficiencies and proactive management of cost base
* Increased final dividend of 0.75 pence per share (2011: 0.6 pence per share), making a total for the year of 1.25 pence per share (13.6% increase)

Current Trading and Outlook:

* The Group is now trading from 324 stores (2011: 321 stores)
* In the first seven weeks of the new financial period, Group revenues, stated on a LFL basis, increased by 1.0%

Commenting on the results, Matthew Williams, Chief Executive said: “Following a challenging start to our financial year we were encouraged by the progress in the second half, particularly considering the context of a tough retail environment. LFL sales grew in both quarter three and quarter four and we also grew total revenues year on year. We have continued to move forward as a business and strengthen our market leading position - evolving our customer offer, delivering world class customer service, expanding our store estate, investing in infrastructure, and reducing net debt.”

“Looking ahead, we recognise that economic conditions are likely to remain uncertain throughout 2013. However I believe, that we are operating in an environment where customers value Topps unique blend of outstanding product range, affordability, industry leading customer service and locational convenience. These key differentiators provide us with a platform to achieve both further growth and market share gains as we consolidate our position as the UK’s number one tile retailer.”

Source : Topps Tiles
www.toppstiles.co.uk/comms-centre/investors.asp