Last close As at 05/08/2026
GBP0.36
▲ 1.90 (5.56%)
Market capitalisation
GBP71m
Research: Consumer
Topps Tiles (TPT) has reported a reassuring Q323 trading update with an acceleration in growth in Online Pure Play and continued revenue growth in Omni-channel with sequential gross margin improvement. The business improvement plan in the previously loss-making Commercial vertical has been completed quickly, which will remove a historic drag on profits. Following this restructuring, management believes the operating businesses and their parts position TPT well for growth in the B2B market. Our profit estimates, which are in the middle of management’s indicated consensus range, are unchanged. This is reassuring in the wider sector context where demand remains volatile and profits remain under pressure.
Topps Tiles |
Reassuring trading and profit guidance re-iterated |
Q323 trading update |
Retail |
5 July 2023 |
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Business description
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Topps Tiles is a research client of Edison Investment Research Limited |
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Topps Tiles (TPT) has reported a reassuring Q323 trading update with an acceleration in growth in Online Pure Play and continued revenue growth in Omni-channel with sequential gross margin improvement. The business improvement plan in the previously loss-making Commercial vertical has been completed quickly, which will remove a historic drag on profits. Following this restructuring, management believes the operating businesses and their parts position TPT well for growth in the B2B market. Our profit estimates, which are in the middle of management’s indicated consensus range, are unchanged. This is reassuring in the wider sector context where demand remains volatile and profits remain under pressure.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
09/21 |
228.0 |
16.5 |
6.7 |
3.1 |
7.2 |
6.4 |
09/22 |
247.2 |
16.4 |
6.4 |
3.6 |
7.6 |
7.4 |
09/23e |
261.3 |
13.2 |
4.8 |
3.6 |
10.2 |
7.4 |
09/24e |
272.9 |
14.2 |
5.0 |
3.6 |
9.6 |
7.4 |
09/25e |
286.4 |
15.6 |
5.7 |
3.6 |
8.6 |
7.4 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Revenue trends consistent with H123
TPT’s total sales growth of 4.4% for Q323, 13 weeks ended 1 July 2023, includes a notable improvement in the Online Pure Play verticals, steady growth for Omni-channel and an unquantified decline in Commercial (-8% in H123), which is unsurprising given the focus on restructuring the business and end-markets remains challenged. Online Pure Play’s year-on-year growth of over 60% has accelerated from over 40% in H123, suggesting our FY23 forecasts, which include H223e year-on-year growth of c 48% growth, are well supported. Omni-channel’s like-for-like growth of 2.5% compounds 2.9% growth in the comparative (Q322) period, indicating the now-complete store rationalisation continues to yield positive results. There is a slight softening in like-for-like growth from H123’s 4.3%, which is likely due to moderating inflation. Commercial’s cost base has been right-sized, with an annual reduction in operating expenses of £1.4m, c one-third of the cost base, at an ‘exceptional’ cost of c £0.4m.
FY23 profit guidance re-iterated
Management has re-iterated that adjusted PBT in H223 will be materially higher than H123, which was negatively affected by inflationary sourcing and logistics pressures. Results for the FY23 will be in line with market expectations, a consensus adjusted PBT of £11.8m, the mid-point of an indicated range of £11.3–12.3m. Note that our normalised PBT excludes share-based payments of c £1.4m.
Valuation: Discount to fair value increased
The recent share price and wider stock market weakness has further increased the discount to long-term multiples (FY23e EV/sales of 0.3x versus historical multiples of 0.7x when comparable growth rates and profitability were reported) and our DCF-based valuation of 104p per share (unchanged).
Exhibit 1: Financial summary
£m |
2019 |
2020 |
2021 |
2022 |
2023e |
2024e |
2025e |
||
30-September |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||
Revenue |
|
|
219.2 |
192.8 |
228.0 |
247.2 |
261.3 |
272.9 |
286.4 |
Cost of Sales |
(84.2) |
(80.0) |
(97.3) |
(111.8) |
(122.2) |
(126.7) |
(133.8) |
||
Gross Profit |
135.0 |
112.8 |
130.7 |
135.4 |
139.1 |
146.2 |
152.6 |
||
EBITDA |
|
|
22.6 |
37.3 |
47.6 |
44.6 |
40.8 |
42.1 |
43.9 |
Operating profit (before amort. and excepts.) |
|
|
15.2 |
8.6 |
20.6 |
20.3 |
16.8 |
17.7 |
19.1 |
Exceptionals |
(1.9) |
(14.6) |
(1.9) |
(5.0) |
(5.4) |
(1.6) |
0.0 |
||
Share-based payments |
(0.0) |
(0.0) |
(0.7) |
(0.5) |
(1.4) |
(1.4) |
(1.4) |
||
Reported operating profit |
13.3 |
(6.0) |
18.0 |
14.8 |
10.1 |
14.8 |
17.8 |
||
Net Interest |
(0.9) |
(3.8) |
(4.1) |
(3.9) |
(3.6) |
(3.6) |
(3.5) |
||
Adjusted Profit Before Tax (company) |
|
|
16.0 |
3.6 |
15.0 |
15.6 |
11.8 |
12.8 |
14.3 |
Profit Before Tax (norm) |
|
|
14.4 |
4.8 |
16.5 |
16.4 |
13.2 |
14.2 |
15.6 |
Profit Before Tax (reported) |
|
|
12.5 |
(9.8) |
14.0 |
10.9 |
6.4 |
11.2 |
14.3 |
Reported tax |
(2.4) |
1.8 |
(3.3) |
(1.8) |
(2.4) |
(3.6) |
(3.9) |
||
Profit After Tax (norm) |
11.3 |
4.3 |
13.3 |
12.8 |
9.9 |
10.3 |
11.3 |
||
Profit After Tax (reported) |
10.1 |
(8.0) |
10.7 |
9.2 |
4.0 |
7.7 |
10.4 |
||
Minority interests |
0.0 |
0.0 |
(0.0) |
(0.2) |
(0.4) |
(0.2) |
0.0 |
||
Net income (normalised) |
11.3 |
4.3 |
13.3 |
12.6 |
9.5 |
10.0 |
11.3 |
||
Net income (reported) |
10.1 |
(8.0) |
10.6 |
9.0 |
3.6 |
7.4 |
10.4 |
||
Average Number of Shares Outstanding (m) |
195 |
195 |
195 |
196 |
197 |
198 |
199 |
||
EPS - basic normalised (p) |
|
|
5.78 |
2.19 |
6.81 |
6.44 |
4.80 |
5.07 |
5.69 |
EPS - normalised fully diluted (p) |
|
|
5.74 |
2.16 |
6.73 |
6.37 |
4.77 |
5.04 |
5.66 |
EPS - basic reported (p) |
|
|
5.18 |
(4.11) |
5.46 |
4.60 |
1.81 |
3.76 |
5.20 |
EPS - adjusted (company) (p) |
|
|
6.62 |
1.57 |
6.02 |
6.14 |
3.86 |
4.34 |
5.20 |
Dividend (p) |
3.40 |
0.00 |
3.10 |
3.60 |
3.60 |
3.60 |
3.60 |
||
Revenue growth (%) |
1.1 |
(12.0) |
18.2 |
8.4 |
5.7 |
4.4 |
4.9 |
||
Gross Margin (%) |
61.6 |
58.5 |
57.3 |
54.8 |
53.2 |
53.6 |
53.3 |
||
Normalised Operating Margin |
6.9 |
4.5 |
9.0 |
8.2 |
6.4 |
6.5 |
6.7 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
54.0 |
138.5 |
122.5 |
119.0 |
118.7 |
118.4 |
117.9 |
Intangible Assets |
5.8 |
0.9 |
0.5 |
7.5 |
7.0 |
6.5 |
6.0 |
||
Tangible Assets |
47.0 |
133.4 |
119.1 |
109.4 |
109.6 |
109.8 |
109.8 |
||
Investments & other |
1.2 |
4.2 |
2.9 |
2.1 |
2.1 |
2.1 |
2.1 |
||
Current Assets |
|
|
57.8 |
66.6 |
65.6 |
61.8 |
64.5 |
62.6 |
68.5 |
Stocks |
30.9 |
29.3 |
32.8 |
38.6 |
42.2 |
43.7 |
46.2 |
||
Debtors |
8.1 |
3.6 |
4.5 |
6.4 |
6.6 |
6.7 |
6.9 |
||
Cash & cash equivalents |
18.7 |
31.0 |
27.8 |
16.2 |
15.1 |
11.6 |
14.9 |
||
Other |
0.0 |
2.7 |
0.5 |
0.5 |
0.5 |
0.5 |
0.5 |
||
Current Liabilities |
|
|
(46.6) |
(90.5) |
(69.3) |
(63.3) |
(66.7) |
(69.6) |
(72.5) |
Creditors |
(43.3) |
(58.4) |
(47.4) |
(43.7) |
(47.3) |
(50.2) |
(53.1) |
||
Tax and social security |
(2.0) |
(1.1) |
(2.0) |
(1.2) |
(1.2) |
(1.2) |
(1.2) |
||
Short term borrowings |
0.0 |
(5.0) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Leases |
0.0 |
(25.5) |
(19.5) |
(18.2) |
(18.2) |
(18.2) |
(18.2) |
||
Other |
(1.2) |
(0.5) |
(0.4) |
(0.4) |
(0.0) |
(0.0) |
(0.1) |
||
Long Term Liabilities |
|
|
(34.9) |
(100.5) |
(93.8) |
(88.4) |
(89.7) |
(82.9) |
(80.9) |
Long term borrowings |
(29.9) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Leases |
0.0 |
(98.6) |
(91.8) |
(84.7) |
(82.8) |
(80.8) |
(78.8) |
||
Other long term liabilities |
(5.1) |
(1.9) |
(2.0) |
(3.7) |
(6.9) |
(2.1) |
(2.1) |
||
Net Assets |
|
|
30.2 |
14.1 |
25.0 |
29.0 |
26.8 |
28.5 |
33.0 |
Minority interests |
(0.0) |
(0.0) |
0.0 |
2.5 |
2.9 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
30.2 |
14.0 |
25.0 |
31.5 |
29.8 |
28.5 |
33.0 |
CASH FLOW |
|||||||||
Operating Cash Flow |
22.6 |
37.3 |
47.6 |
44.6 |
40.8 |
42.1 |
43.9 |
||
Working capital |
4.6 |
20.8 |
(14.6) |
(11.0) |
(0.1) |
1.2 |
0.3 |
||
Exceptional & other |
(1.0) |
(2.2) |
(0.8) |
(3.4) |
(2.6) |
(0.2) |
0.0 |
||
Tax |
(3.4) |
(1.0) |
(1.5) |
(3.5) |
(2.4) |
(3.6) |
(3.9) |
||
Net operating cash flow |
|
|
22.8 |
54.9 |
30.6 |
26.8 |
35.6 |
39.5 |
40.3 |
Capex |
(7.6) |
11.8 |
(2.3) |
(3.0) |
(6.0) |
(6.3) |
(6.6) |
||
Acquisitions/disposals |
(2.7) |
(0.1) |
(0.2) |
(4.0) |
0.0 |
(6.3) |
0.0 |
||
Net interest |
(0.8) |
(3.8) |
(4.1) |
(3.9) |
(3.6) |
(3.6) |
(3.5) |
||
Equity financing |
0.0 |
0.0 |
0.1 |
0.1 |
0.0 |
0.0 |
0.0 |
||
Dividends |
(6.6) |
(4.5) |
0.0 |
(8.0) |
(7.5) |
(7.1) |
(7.2) |
||
Other |
0.0 |
(46.1) |
(27.4) |
(19.6) |
(19.6) |
(19.7) |
(19.8) |
||
Net Cash Flow |
4.9 |
12.3 |
(3.2) |
(11.5) |
(1.1) |
(3.5) |
3.3 |
||
Opening net debt/(cash) |
|
|
16.0 |
11.1 |
(26.0) |
(27.8) |
(16.2) |
(15.1) |
(11.6) |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
24.8 |
5.1 |
(0.1) |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
11.1 |
(26.0) |
(27.8) |
(16.2) |
(15.1) |
(11.6) |
(14.8) |
Closing net debt/(cash) including leases |
|
|
11.1 |
98.1 |
83.5 |
86.7 |
85.9 |
87.4 |
82.1 |
Source: Company data, Edison Investment Research
|
|
Research: Healthcare
Paradigm has announced the completion of patient recruitment for stage one (dose selection) of its pivotal Phase III trial, PARA_OA_002, a multi-centre (US/Australia/UK/EU/Canada), two-stage, adaptive, randomised, double-blind, placebo-controlled study to assess injectable pentosan polysulfate (iPPS) in patients with knee osteoarthritis (kOA) pain. Paradigm has efficiently recruited participants for the trial through various initiatives, such as through its partnership with NFL Alumni Health. Management expects stage one to be complete in Q3 CY23, and for stage two to commence with the most effective dose later in H2 CY23. The selected dose will also be used in the initiation of the separate confirmatory Phase III trial in H2 CY23. These events represent key milestones for Paradigm, in our view.