Weak consumer confidence continues to impact Topps Tiles
Topps Tiles l-f-ls deteriorated further during its third quarter as weak consumer confidence and a tough comparative impacted performance. Topps was supported last year by a more buoyant housing market in spring 2016, as consumers moved before the stamp duty increase; however, there has been no such momentum in the housing market in 2017. Rising inflation and greater economic uncertainty as Brexit becomes a reality has also encouraged customers to hold off major projects such as redecorating kitchens and bathrooms. Topps also phased out wood flooring during the second half of its 2015/16 financial year, which has contributed to its sales decline.
The rate of decline did slow over the quarter, with l-f-ls falling 5.8% for the first seven weeks of the period. The launch of a new customer service platform ‘Natural Service’ supported this; Topps should have benefited from higher average transaction size and more customer recommendations as a result – just as Carpetright did after launching a similar customer service training programme. The net opening of 19 stores, for a total of 367, on April 2016 also supported overall performance.
Given the harsh economic environment, Topps is doing more to develop its trade offer, which will give Topps stability from the more difficult consumer market. It has signed over 50,000 members to Topps’ Rewards+ trade loyalty programme and has acquired a small commercial tile business. However, with the economy remaining weak, l-f-l growth will be challenging for the rest of its financial year 2016/17.
Source: GlobalData 1st July 2017