2023 has been a further year of development and progress for Topps Tiles Plc. In their 60th anniversary year, the Group achieved a number of significant milestones as well as made substantial strategic and operational progress across the business. Topps Tiles Plc has delivered a third consecutive year of record sales, and in doing so achieved their market share goal, two years ahead of schedule.
This goal, which was set for the business in 2020 and refer to as ‘1 in 5 by 2025’, was to take a 20% market share by 2025, up from 17% at that time. This year, Topps Tiles Plc increased their market share by 2.3 percentage points, to 22.1% of the £1.2 billion market for tiles and related products in the UK, and therefore achieved their goal in just three years, rather than five.
Financial performance in 2023 was robust. Including a full year of performance from the Group’s Online Pure Play businesses, sales were up 6.3% year on year to a new record of £262.7 million (2022: £247.2 million), more than £40 million higher than 2019 (the last year before the pandemic). Gross profit was up 2.8% to £139.2 million, also a record for the Group. Gross margins were lower year on year as a result of business mix and FX movements, but trended upwards through the period as the most acute levels of product cost inflation abated. Adjusted operating expenses were 5.7% higher as a result of inflation and a full year of the cost base relating to Online Pure Play, partially offset with lower costs from fewer stores year on year and a cost reduction programme in Parkside. Adjusted profit before tax of £12.5 million was down year on year (2022: £15.6 million) reflecting the inflationary impacts on costs, and adjusted EPS was down from 6.14 pence last year to 4.49 pence. The Group’s cash generation in the year was strong, with growth in cash of £7.2 million over the year, further increasing the strength of the Group’s balance sheet. The full year dividend is being maintained at 3.6 pence per share, in line with Topps Tiles Plc’s capital allocation policy, with the Board able to look through short term periods of macroeconomic weakness with confidence about the Group’s medium-term prospects.
Topps Tiles, the Group’s largest brand, had a good year, generating like-for-like sales growth of 3.1% on the back of two exceptional years of growth. Total sales were £230.9 million (2022: £227.0 million), a record for the brand, and with average sales per store now up 30% compared to the pre-pandemic period of 2019. The business continued to extend its range of products and achieved world-class customer satisfaction scores whilst doing so. Gross margins improved sequentially over the course of the year, with each trading quarter recording higher gross margins (excluding rebates and other adjustments) than the last. Cost control has been strong over recent years, with virtually all operating cost inflation since 2019, including energy and labour costs, offset through efficiencies and the optimisation of our store network.
Pro Tiler Tools, acquired in March 2022, delivered excellent sales growth and strong profitability, and, alongside Tile Warehouse, recorded sales of £22.4 million in 2023 in the Group’s Online Pure Play channel, up from £9.3 million in the part-year period last year. Topps Tiles Plc are continuing to pursue aggressive growth in this area of business and have launched two new business and increased the range of proprietary brands available to their trade customers in the last twelve months.
Parkside, Topps Tiles Plc’s commercial business focused on architects and designers, delivered a reduced level of sales of £9.4 million (2022: £10.9 million). Following a period of losses, the business was restructured at the end of the third quarter, and moved back into profitability in quarter four. Parkside is now well set for future growth from a sound financial base.
