October 3, 2018 / 6:22 AM / 10 months ago

Topps Tiles shares jump on profit forecast above expectations

(Reuters) - Topps Tiles (TPT.L) shares rose around 10 percent on Wednesday after Britain’s biggest tile retailer forecast full-year adjusted profit ahead of market expectations, as consumer spending picked up following an unusually hot summer.

In a bid to boost margins and market share, Topps Tiles has launched new products and invested in promotions to attract retail customers. It has also expanded into the commercial tile market to cater to bigger clients such as house builders and architects.

Comparable sales rose 1.2 percent in the fourth quarter ended Sept. 29, compared with a 2.3 percent fall in the previous quarter.

“There was some help from a slightly easier prior year comparative, but we suspect there has also been a bounce back from a quieter summer period when the UK heatwave, and to some degree the World Cup, likely resulted in more muted activity,” Liberum analysts said.

The retailer often tracks the wider health of Britain’s housing market and struggles when consumers decide not to move or spend money on home improvements.

The company said it remained cautious due to uncertainty in Britain’s economic outlook.

Since the Brexit vote in 2016, many households have seen their spending power pinched by inflation that has risen faster than pay. Uncertainty about Britain’s economy outside the EU has also weighed on the property market.

Like-for-like revenue for the year was flat when compared to the prior year, said the company, which gets a large part of its business from a growing trend of Britons spending to improve their homes with modern tile designs, rather than selling their properties.

Adjusted revenue is expected to be about 215 million pounds for the full year, compared with 211.8 million pounds, a year earlier.

Shares of Topps Tiles, which was founded in 1963, were up 8.5 percent at 68 pence at 0720 GMT and among the top gainers on the London Stock Exchange.

Reporting by Arathy S Nair and Karina Dsouza in Bengaluru; Editing by Bernard Orr and David Evans

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