Topps Tiles (TPT) H2 2024 earnings summary

Executive summary

• Launched Mission 365, targeting £365 million in annual sales and 8–10% adjusted PBT margin, with five key growth areas: trade, category expansion, B2B, digital, and acquisitions, and significant progress in H2 FY24.

• Expanded addressable market from £1.2 billion to £2.1 billion, a 75% increase, by moving into hard floor and wall surface coverings and related products.

• Completed acquisitions of CTD Tiles and the final 40% of Pro Tiler Tools, supporting B2B and trade growth strategies; CTD subject to ongoing CMA review.

• Digital and online channels saw strong growth, with Online Pure Play revenue up 36% year-over-year and improved trader digital experience.

• Outperformed the market with a 5% sales decline versus a 10–15% market drop, and returned to modest growth (just over 1%) in the first eight weeks of the new financial year.

Financial highlights

• Statutory group sales down 4.1% to £252 million; adjusted sales (ex-CTD) down 5.4% to £248.5 million year-over-year, outperforming a 10–15% market decline.

• Adjusted pre-tax profit fell 50% to £6.3 million; adjusted EPS down 46.8% to 2.4p; statutory profit at £6 million.

• Adjusted gross margin up 30 bps to 53.3%; reported gross margin 54.4% due to one-off CTD stock gains; overall gross profit down 4.8% to £132.5 million.

• Operating expenses reduced by £1.1 million year-over-year; Parkside delivered £1.2 million cost savings.

• Net cash reduced to £8.7 million after £19 million spent on acquisitions; excluding acquisitions, net cash increased.

Outlook and guidance

• Macroeconomic indicators remain mixed; mortgage approvals up but housing transactions and consumer confidence still weak.

• Guiding for £5 million in inflationary cost headwinds in FY25, mainly from wage and National Insurance changes.

• CapEx expected to rise to £8–9 million in FY25, mainly for new distribution center fit-out and warehousing.

• No market recovery assumed in Mission 365; growth plan is self-help focused, with only modest market growth expected.