Britain’s scorching summer has delivered another blow to the high street after Topps Tiles warned that the recent heatwave has damaged sales and will leave annual profits well below last year’s level.
The flooring retailer said extreme temperatures forced housebuilders and tradespeople to temporarily stop work, disrupting demand just as consumer confidence was already under pressure.
The warning sent shares in the company tumbling by around eight per cent in early trading on Wednesday.
Topps Tiles revealed sales fell 1.8 per cent in the three months to June 27, with trading deteriorating as the quarter progressed.
The group said customers continued to favour cheaper products as households remained cautious about spending, while the unusually hot weather added further strain.
“Recent periods of extreme heatwave conditions led to temporary work stoppages among housebuilders and traders, further affecting activity levels,” the company said.
Although some delayed work is expected to resume later this year, the retailer warned that much of the lost business is unlikely to be recovered before its financial year ends in September.
As a result, Topps now expects underlying annual profits to exceed £6.5 million, a sharp decline from the £9.2 million reported last year.
The update underlines the growing impact that extreme weather is having on parts of the British economy, with construction and outdoor trades among the sectors most exposed to prolonged periods of intense heat.
Chief executive Alex Jensen said the company continued to outperform the wider market despite weakening consumer confidence and increased demand for lower-priced products.
He said the business was making progress with cost-cutting measures and longer-term strategic plans but acknowledged that the wider economic backdrop remained difficult.
“In the short term, the macro-economic environment continues to remain challenging,” he said.
The retailer has already been shrinking its estate in response to tougher trading conditions.
In April it announced the closure of 23 stores, representing around seven per cent of its estate, as part of efforts to reduce costs.
The group has also been reshaping its business following last year’s acquisition of tile retailer CTD out of administration.
However, that deal attracted scrutiny from the Competition and Markets Authority, forcing Topps Tiles to sell several stores before receiving approval.
The company now operates 23 CTD outlets, down from the 31 it initially acquired.
Topps also expanded further in December by purchasing the Fired Earth brand after the premium tile retailer collapsed into administration, bringing another well-known name under its umbrella.
Despite those acquisitions, the latest trading update highlights the difficult environment facing retailers linked to the housing market, where weaker consumer confidence, subdued home improvement spending and now extreme weather are combining to squeeze demand.
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