Topps Tiles to raise £15 million

By James Davey

LONDON (Reuters) - Tile and wood flooring retailer Topps Tiles (TPT.L) raised 15.4 million pounds from a share placing to bolster its balance sheet against a possible double-dip recession.

The company, which trades from 321 stores in Britain and Holland, on Tuesday posted a better-than-expected 45-percent fall in year profit to 16.3 million pounds but said there were signs of a return to stability in its new financial year.

Its shares, which have more than quadrupled over the past year on recovery hopes, were down 4.2 percent at 93 pence at 11:20 a.m., valuing the business at 155 million pounds.

"It would not be a surprise if the reduced financial risk proved positive for the shares even if the (share) issue is dilutive," said David Stoddart, analyst at Altium Securities.

Surveys and government data have recently pointed to a pick-up in British consumer spending after a brutal downturn in late 2008 and early 2009.

But many retailers remain concerned about the outlook for 2010, given rising unemployment, low and slowing earnings growth and heightened debt levels.

Topps Tiles chief executive Matthew Williams told Reuters in an interview the share placing of 17.1 million shares at 90 pence "does give us that financial flexibility and an extra level of comfort should sales for whatever reason take a lurch down again."

"It also gives us the opportunity to get back on the front foot in terms of expansion, as and when we see opportunities arising in the property market."