Topps Tiles says it’s ‘well-positioned’ to make it through the year despite store closures caused by Covid-19
- Topps Tiles’ retail business LFL sales declined 3.1% in the 12 weeks to March 21
- It hopes to save about £9.5m from the 100% year-long business rates holiday
- The tile specialist is not publishing financial guidance for the 2020 fiscal year
Tiles and wood flooring retailer Topps Tiles says it should be able to maintain its financial strength even if its stores remain shut for twelve weeks,
The Leicestershire-based firm expects the closure of its stores from the coronavirus pandemic to cut its revenues and profits in the second half of the financial year.
But the tile specialist says it has enough cash reserves to give it ‘good levels of liquidity’ for the rest of the ongoing financial year even if its shops shut down for nearly three months and sales diminish for a further quarter.
Topps Tiles has struggled recently with its sales performance. Its retail business saw a like-for-like sales decline of 3.1 per cent in the twelve weeks to March 21
But due to the government’s coronavirus aid package and its high cash reserves, the firm believes it is ‘well-positioned’ to recover from the disruption caused by the pandemic. The business’ online operations also remain open, which should mitigate the drop in sales.
It hopes to save an estimated £9.5million from the 100 per cent year-long business rates holiday announced by the UK government last week, as well as £3.1million from VAT deferrals and £2million per month from the Job Retention Scheme.
Topps Tiles has struggled recently with its sales performance. Its retail business saw a like-for-like sales decline of 3.1 per cent in the twelve weeks to March 21. This was not as bad as the last quarter of 2019 though when the group recorded a 5.4 per cent fall in like-for-like sales.
The firm blamed that quarter’s performance on political and economic uncertainty arising from the UK general election. Its CEO Matt Williams resigned from his post in November after two decades at the business, including twelve in charge.
Topps Tiles says it has enough cash reserves to give it ‘good levels of liquidity’ for the rest of the ongoing financial year even if its shops shut down for nearly three months
Currently, the group says it has completely drawn down its £39million revolving credit facility, has £20million in cash liquidity immediately available and an £11million accordion facility that is dependent on lender approval.
Due to the pandemic, it is also not publishing financial guidance for the 2020 fiscal year at this time and is unlikely to make interim dividend payments. But the firm expects its liquidity to remain robust for the foreseeable future.
‘Topps remains in a good financial position, with a robust balance sheet,’ the company writes.’
It adds: ‘While the immediate outlook is challenging and uncertain, Topps remains a resilient, market-leading business with good levels of cash liquidity and a strong management team and the Board is confident that the Group is well-positioned to recover once the situation normalises.’
Shares in Topps Tiles rose 12.75 per cent to 38.9p on the announcement.