Topps Tiles — Improving revenue growth through Q225

Topps Tiles (LSE: TPT)

Last close As at 02/04/2025

GBP0.32

−2.30 (−6.76%)

Market capitalisation

GBP63m

More on this equity

Research: Consumer

Topps Tiles — Improving revenue growth through Q225

Topps Tiles’ H125 trading update indicates improving volume and revenue trends through Q225, with an exit rate of high-single-digit revenue growth in March 2025. There is a clear message that the Mission 365 initiatives to grow revenue (category extensions, greater trade and digital sales) are coming through against a subdued backdrop for the homeowner. In addition to good revenue growth, there is positive news on gross margin, helped by pricing, mix and discount structures to counter the dilution from growing trade sales. Our FY25 estimates are unchanged but they need the March trends to continue in order to deliver the required c 7% underlying revenue growth excluding the contribution from CTD Tiles in H225. The statement highlights there is good progress in identifying potential candidates to succeed Rob Parker as chief executive, with a high degree of interest expressed.

Russell Pointon

Written by

Russell Pointon

Director of Content, Consumer and Media

Retail

H125 trading update

2 April 2025

Price 34.00p
Market cap £67m

Net cash at 30 September 2024 (excluding IFRS 16 liabilities of £86m)

£8.7m

Shares in issue

196.5m
Free float 70.2%
Code TPT
Primary exchange LSE
Secondary exchange N/A
Price Performance

Business description

Topps Tiles is the market-leading specialist retailer/distributor of wall and floor tiles, and associated products such as tools, grouts and adhesives, to its retail, trade and commercial customers in the UK.

Analyst

Russell Pointon
+44 (0)20 3077 5700

Topps Tiles is a research client of Edison Investment Research Limited

Note: PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Year end Revenue (£m) PBT (£m) EPS (p) DPS (p) P/E (x) Yield (%)
9/23 262.7 13.9 4.77 3.60 7.1 10.6
9/24 251.8 7.2 2.68 2.40 12.7 7.1
9/25e 292.2 10.0 3.65 2.60 9.3 7.6
9/26e 313.4 13.6 4.96 3.00 6.9 8.8

Group revenue excluding the contribution from CTD Tiles increased by 4.0% y-o-y to £127.7m (H124: £122.8m). Underlying revenue growth improved from +3.3% in Q125 to 4.4% in Q2 to give an increase for H125 of 3.9%, weighted to the end of the period following a weak start in January 2025, which is consistent with trends we have heard from a number of companies.

The 3% like-for-like growth reported for the Topps Tiles brand was driven by 12% growth in trade sales and 15% through digital channels. Management’s efforts to attract more trade customers, which are more frequent and more loyal than homeowners, is reflected by the good sequential growth in the number of active customers from end Q125 (141k, +7% y-o-y) to end H125 (146k, +11%), and implied higher spend per average customer. We discussed the Mission 365 growth initiatives in our August 2024 Outlook note.

Outside the Topps Tiles brand, revenue for Pro Tiler Tools and Tile Warehouse have continued their strong growth.

The Competition and Markets Authority has approved in principle the proposed undertaking to sell four of CTD’s stores in lieu of a Phase II investigation.

With respect to profitability, management highlights a recent review of product pricing, mix and discount structures has delivered a strong improvement in gross margins, despite the continued higher contribution from trade sales. They have also reiterated the significant H2 weighting of profit in FY25 due to the expected revenue growth from new initiatives and the phasing of investments costs (eg higher energy usage in H125 and holiday pay accruals).

From an operational perspective, the new warehouse in Northampton has been performing well, while already incorporating CTD’s supply chain, and management highlights the ongoing investment in core systems and marketing platforms to enable future revenue growth.



General disclaimer and copyright

This report has been commissioned by Topps Tiles and prepared and issued by Edison, in consideration of a fee payable by Topps Tiles. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright 2025 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or sol icitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Topps Tiles

View All

Latest from the Consumer sector

View All Consumer content

Research: Industrials

PVA TePla — Preparing for the metrology inflection

PVA TePla (PVA) reported final FY24 results that were in line with the preliminary numbers reported on 12 February, with revenue of €270m and EBITDA of €48m. Although fresh FY25 EBITDA guidance implies a structurally and significantly higher opex level, we see this as supportive of the investment case as it enables a higher service level and increased sales effort, as well as increased R&D. The coming years should see rapidly increasing revenues from high-volume clients in the metrology division, which should support the top line, margins and the share price. PVA’s valuation appears undemanding compared to peers and our discounted cash flow.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free