UK's Topps Tiles flags persistently tough market, shares slump

By Aby Jose Koilparambil

(Reuters) -British tile retailer Topps Tiles said on Wednesday challenging market conditions had persisted into the second half of the fiscal year amid weakness in the home repair and sales segments, sending shares 4.2% lower in morning trade.

Shares in Britain's largest tile retailer hit an over 19-month low of 38 pence, and the stock was among the top percentage losers in the FTSE Small Cap index.

Fortunes of companies firmly tied to the health of the housing repair, maintenance and improvement (RMI) segment have been under pressure as the squeeze on household budgets forces homeowners to delay home improvement projects.

Most big home builders have also pointed to relatively weak sales during the traditionally strong spring season, and have scaled down annual build targets.

"Market conditions have remained challenging overall, with subdued demand in the domestic repair, maintenance and improvement sector, especially for bigger ticket projects," the company said in a statement.

Topps Tiles, which has more than 300 stores across the UK, said like-for-like sales in the third quarter were down 9.7% year on year.

The company, however, said its online division continued to perform well and the group has grown its market share.

"While there is no easy fix to the current pressures it faces, Topps Tiles does hold the leading position in the UK market," Julie Palmer, partner at Begbies Traynor wrote in a note.

British roofing and insulation materials provider SIG and flooring firm Headlam have warned on profits, while Travis Perkins, Britain's largest supplier of building materials, posted a decline in first-quarter revenue in April.

Shares in sector peer SIG were trading 1.7% lower in morning trade.

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu and Miral Fahmy)