Adjusted profit guidance cut
Topps Tiles Plc has lowered its full-year adjusted profit-before-tax expectation to above £6.5 million for the financial year ending in September, after trading through the third quarter was disrupted by extreme heat and changing customer mix. The group said temporary work stoppages among housebuilders during the heatwave and a move by consumers toward lower-priced products were key drivers behind the weaker-than-expected performance.
Quarterly revenue and CTD acquisition
Group revenue including CTD - the brand and certain assets acquired on 19 August 2024 - was £75.6 million in the third quarter of fiscal 2026, 1.8% lower than the comparable period a year earlier. Excluding CTD, group revenue for the quarter was £69.4 million.
Like-for-like sales and trading dynamics
The business reported like-for-like revenue broadly flat versus the prior year, although performance deteriorated in the second half of the quarter. Management acknowledged that trading fell short of its internal forecast and attributed the shortfall to both macroeconomic pressures encouraging purchases of lower-priced ranges and heat-related pauses in site activity that reduced demand from builders and traders.
Topps said trade sales declined by 0.8% compared with the prior year during the quarter, with recent periods particularly affected by temporary work stoppages among housebuilders. The company expects a degree of recovery - a catch-up spread over a six-month period - but emphasised that this rebound is unlikely to be fully realised within the current financial year.
Category and channel trends
The group reported growth in its new "hard surface" category, with extensions up 10.9% in the third quarter versus the prior year. Online sales continued to claim a larger share of total sales, with the online revenue proportion rising 2.3 percentage points against the half year and 3.7 percentage points versus the third quarter of fiscal 2025.
CTD estate and store changes
CTD now trades from 23 stores, down from 31 in the prior year. Management said this reduction followed commercial pressures and the disposal of four stores that were linked to a Competition and Markets Authority investigation.
Management view and cost measures
Chief Executive Alex Jensen said the group was "making significant strategic progress across our priorities" and that measures to improve profitability "are working and will position the business for long-term sustainable" performance. He added that "the economic environment continues to remain challenging." Topps confirmed it remains on track to deliver a set of self-help actions including store portfolio optimisation, a new lower-cost flexible labour model, and consolidation of head office roles.
Key points
- Topps Tiles has lowered full-year adjusted pre-tax profit guidance to above £6.5 million due to a softer trading quarter.
- Group revenue including CTD was £75.6 million in Q3, down 1.8% year-on-year; excluding CTD revenue was £69.4 million.
- Trade activity and the home improvement market were affected by temporary work stoppages for housebuilders during a heatwave; category mix shifted toward lower-priced products, while the hard surface category and online channel saw growth.
Risks and uncertainties
- Continued weak demand from builders and traders could further depress trade revenues - this primarily affects the construction and home improvement sectors.
- Persisting macroeconomic pressure that drives consumer demand toward lower-priced ranges may constrain margins and profitability - impacting retail and consumer discretionary sectors.
- Recovery of lost volumes from temporary site stoppages may take longer than anticipated; management expects some catch-up but does not anticipate full recovery within the current financial year - risk applies to revenue timing and cash flow conversion.
Topps Tiles said it still believes its strategic actions will improve profitability over time, but highlighted that the near-term environment remains challenging and will influence how quickly performance normalises.