Rob Parker’s baptism of fire as Topps Tiles’ new chief executive continues with retail trading down by around 80% in April, despite online sales being nearly three times up on pre-crisis levels.
Topps’ trade business, which accounted for 56% of its sales in FY 2018/19, did not fare better with a 75% drop in activity levels in April, according to a Topps-run survey. The retailer’s poor recent performance builds on an underwhelming H1 2019/20 with sales declining 3.8% to £106.2m due to weak consumer sentiment prior to and after the snap general election.
There are positive elements within these results, despite the challenging conditions, which was reflected in its share price being up by 5.8% in the first 30 minutes of trading. Topps has retained a net cash position of £14m at the time of publication and remains confident on its future liquidity. It has also received additional funding, had conditions on its covenants relaxed for the next 12 months and has laid out a pathway to re-open its stores.
It has used its stores as collection hubs for online orders since 22 April, after it closed all stores on 23 March, with 250 stores currently in this format. Of these stores, 129 have since allowed for the controlled re-entry of customers, with plans to extend this to the remaining 121 by the end of May, and into all outlets by the end of June. This is an important step for Topps as, prior to lockdown, the retailer was focused creating instore inspiration, with the rollout of its Boutique format and consultation zones to encourage customers to trade up.
Topps has focused more on pricing as its stores have been re-opening to stimulate demand, running deeper discounts online and extending its value range. This has been necessary, but it must ensure it strikes a balance between this and its prior focus on design to separate itself from the larger DIY sheds, which have flourished since lockdown eased. It should more actively promote its online design tool, Lifestile, to attract shoppers during the pre-purchase research stage.