DIY boom boosts Topps Tiles
PROFITS at City darling Topps Tiles almost doubled during the first half of the year, fuelled by Britain‘s unabated love affair with DIY and home improvements.
The tile and wood flooring specialist, a long-standing favourite among retail investors, produced a 22.7% rise in like-for-like turnover and pre-tax profit of £15.3m, almost twice the £7.8m achieved this time last year.
Margins also remain strong with gross margin up from 57% to 59.4% and net margin up from 14.1% to 19.9%.
There was further good news for shareholders in the shape of a 2p half-time dividend, three times the 0.6p payout a year ago, giving earnings per share of 5p, more than double the 2.40p figure last year.
Topps Tiles shares have surged by more than 150% over the past year and earlier this month it carried out a five-for-one share split to increase their attractiveness to small investors.
City enthusiasm for Topps shares has been only slightly tempered by an admission from chief executive Nick Ounstead that maintaining this rate of growth will be difficult.
'I think what seven years as a quoted company has taught us is to be very cautious what you say. We're doing well even on very strong comparables so we're very pleased with the way the current year has started,' he told This Is Money.
However he promised no let-up in the company‘s national advertising campaign. Topps is currently running campaigns with GMTV, Sky‘s UK Living channel and is sponsoring the weather spots on the Carlton ITV channel.
Ounstead said that while the first half of the year had proved exception, sustaining like-for-like sales growth for the rest of the financial year will prove challenging.
The omens are good, however. Like-for-like sales are already up 19.2% in just the first six weeks of the second half.
Ounstead said the company remained on target to open 24 new stores in the current year and carry out seven major store refits. Two stores have been closed and relocated. Topps is also expanding its warehouse capacity to help it support its store opening programme across the UK. The company has 206 stores and plans to grow to 350.
Topps, now a FTSE 250 company, is also trading on the continent through its joint venture in the Netherlands. The company is now trading from eight stores and selling both ceramic tiles and wood and laminate flooring throughout the country. Another three stores are due to open there before the end of the financial year.
