LONDON (ShareCast) - (Sharecast News) - Specialist tile retailer Topps Tiles reported a record first half turnover of £119m on Tuesday, supported by ongoing strength in the UK repair, maintenance and improvement (RMI) sector, as well as success in its growth strategy.

The London-listed firm said like-for-like sales were ahead 22.7% on a two-year basis in the 26 weeks ended 2 April, and up 19.7% on a one-year basis.

Group gross margins were relatively stable at 56.1%, compared to 57.6% a year earlier, which the board put down to increases in the cost of goods being passed through to customers on a "pound-for-pound basis", together with mix changes.

Costs were said to have been well-controlled, with increases due to inflation and the normalisation of business rates expenses.

Adjusted profit was ahead 37% year-on-year to £7m, while the firm increased its stock holding to support sales in a "challenging" supply chain environment.

Cash narrowed due to the acquisition of Pro Tiler, investment in working capital and the repayment of deferred VAT, although it was expected to improve by the year-end.

The board declared an interim dividend of 1p per share, up from the nil distribution made for the first half of the 2021 financial year.

Operationally, Topps Tiles said trading remained at "good levels" within its primary Topps brand, with like-for-like sales growth of 5.7% in the first seven weeks of the second half.

In the most recent five weeks, where the comparative period in 2021 was not impacted by trading restrictions, sales on a like-for-like basis were "slightly below" a very strong period last year, as expected.

Inflationary pressures remained, with gas prices, shipping costs and the availability of raw materials still challenging.

Topps Tiles said its strong brands, operational flexibility and well-capitalised balance sheet left it "well-positioned" to respond to a more uncertain consumer outlook.

"The group has delivered record first half revenues against a backdrop of continued robust demand for home improvements," said group chief executive officer Rob Parker.

"While supply chain and inflation headwinds strengthened in the period, we are managing these challenges effectively overall and believe we remain well positioned relative to many of our competitors.

"We have continued to develop the Topps Tiles brand, enhancing our store portfolio and introducing a number of new developments to our award-winning website to further strengthen our omni-channel capability."

Parker added that the company was pleased to launch the Tile Warehouse brand, an online-only operation set to focus on low prices aimed at homeowners.

"This builds on the acquisition of Pro Tiler in March, and forms the basis for a new, high growth, online-only sales channel, leveraging our core strengths in product, service and scale.

"Looking ahead, we are mindful of the growing burden on consumers from inflation and rising interest rates as well as ongoing supply chain challenges, however, we remain confident in our strategy and medium term growth prospects."

At 1035 BST, shares in Topps Tiles were up 1.92% at 53p.

Reporting by Josh White at Sharecast.com.

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