Topps Tiles - Market outperformance again in FY24

Topps Tiles (TPT) has reported a good profit outturn for FY24, ahead of our prior expectations, which is encouraging in the context of the challenging external environment. Management believes the overall revenue decline of 5% means TPT has once again outperformed the market that it estimates to have declined by 10-15%. TPT has made good early progress on the key growth areas under its recently announced Mission 365 strategy, which are expected to drive the bulk of the growth in the medium term. With respect to the outlook for FY25, TPT has returned to positive revenue growth in the first eight weeks of the year, and management continues to highlight more favourable housing-related indicators. From a cost perspective, there are inflationary pressures, which management is hopeful of mitigating, as it has previously. Our forecasts are under review.

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