Topps Tiles Company Research (TPT)

Topps Tiles' (TPT’s) H126 results show good progress on all strategic initiatives, which have contributed to further market outperformance, as well as on improving profitability. Trade revenue growth continues to outpace retail, driven by continued strong growth by Pro Tiler Tools, and new initiatives such as the credit offering have been well received. Digital growth has been boosted by new customer relationship management capabilities. Category extensions and a focus on better sales conversion have helped deliver market outperformance. With respect to acquisitions, Fired Earth is performing ahead of expectations and is already profitable, and CTD Tiles is on track to be profitable in H226. In response to the weaker-than-expected Q226 revenue, management has implemented three self-help cost initiatives: network rationalisation; a more flexible labour model in stores; and reducing head office and central functions. These initiatives support our estimates.