Topps Tiles Shares Slip Despite Trading Outperformance

Topps Tiles (LON: TPT) shares have fallen around 1.7% on Wednesday morning despite reporting a trading update that highlights continued outperformance within a challenging market.

The tile specialist announced that for the 26-week period ended March 28, 2026, total group revenue reached £142.7 million, a slight decrease of 0.1% year-on-year.

Excluding the CTD business, which was impacted by the CMA process, group revenue actually grew by 2.1%. While the first quarter saw robust revenue growth, the second quarter moderated slightly to +0.6%.

Topps Tiles continues to outperform the broader market, which declined by approximately 2.5% over the same period, according to the Barclays UK Consumer Spend Report for Home Improvements & DIY. Like-for-like revenue growth for Topps Tiles was a modest +0.1% in the first half.

The company remains on track to return the CTD business to profitability this financial year, with housebuilder volume rebounding from the end of fiscal year 2025. CTD stores recorded like-for-like growth of +1.0% in the first half.

To offset the impact of a softer home improvements market and government/macro-driven cost inflation, Topps Tiles has initiated self-help measures aimed at driving sustainable profit growth.

These measures include cost-saving initiatives across head office and the store portfolio, including the closure of 23 underperforming stores this financial year. The company anticipates that these closures will reduce overall Topps Tiles revenue but improve profitability through sales transference and cost reduction. Savings are expected to be more pronounced in the second half of the year.

Topps Tiles’ digital strategy is progressing, with online revenue (including CTD) rising to 21.0%, a 2.0 percentage point increase compared to full-year 2025 and a 3.3 percentage point increase compared to the first half of the previous year. The first half also saw positive results from the new customer engagement platform, the launch of live stock visibility in Topps Tiles, and a new transactional website for CTD.

The Trade App is still slated to launch in April 2026, and the system modernization rollout, including new tills and an ERP upgrade, began in March 2026. The Group’s online brands have continued to perform strongly, with Pro Tiler delivering revenue growth of over 21% year on year. Fired Earth has traded well since acquisition, already delivering a positive profit in the first half, with further growth expected in the second half.

CEO Alex Jensen stated, “Topps continues to outperform a softer market. In light of subdued consumer sentiment and geopolitical uncertainty as well as the cumulative impact of cost inflation, the management team is implementing a targeted programme of self-help measures weighted towards the second half. These actions are designed to support year on year profit growth and provide a stronger financial platform for 2027 and beyond.”

AskTraders Takeaway: The market’s negative reaction to the trading update may reflect concerns about the impact of store closures on overall revenue, despite the anticipated improvement in profitability. Investors may also be cautious about the softer home improvements market and its potential impact on future performance.

Analyst Summary: Bull and Bear Cases