Topps Tiles defends its strategy amid critical letter from prominent investor

Topps Tiles has responded to a major shareholder who accused the company of numerous failures and called for a review of its management and strategy.

MS Galleon, which owns a 29.9 per cent stake in Britain’s biggest tiles retailer, warned the business was in “significant danger” of losing further market share to rivals.

in a open letter In a writing by its CEO, Piotr Lipko, the Vienna-based company blamed Topps management for multiple “strategic errors and operational failures.”

Lipko claimed that the company had shown a “complete failure” to adapt to the changing retail environment and had shown a “continued lack of commitment and willingness” to listen to MS Galleon’s concerns.

He also criticized Topps Tiles for a “disastrous” acquisition of CTD Tiles, whose brands and intellectual property, along with 30 stores, were purchased in August.

He urged the company to conduct a “comprehensive review” of its leadership and strategy to help create a more omnichannel and uniquely focused business.

The letter was published two days after results showed Topps Tiles slumped to a pre-tax loss of £16.2 million in the year ended September 28, following a 9.1 million drop. percent on comparable revenues.

MS Galleon said the group’s sales had been comparatively weaker than peers such as Wickes, Victorian Plumbing and Screwfix owner Kingfisher.

In response, Topps Tiles noted that its like-for-like sales had remained stable since 2019 even though the wider UK tile market had contracted by around 20 per cent over the same period.

Paul Forman, its chairman, said: ‘Our latest results show that we continue to gain market share, consistently outperforming the wider tile market despite very difficult trading conditions.

“We believe this demonstrates the effectiveness of our strategy, which has the full support of the board of directors.”

Under its ‘Mission 365’ strategy announced in May, Topps Tiles is targeting annual revenues of £365m and adjusted pre-tax margins of between 8 and 10 per cent over the medium term.

The Leicestershire-based group hopes to achieve this by diversifying into new product categories, driving B2B sales and developing the Pro-Tiler and Tile Warehouse online businesses.

It said the acquisition of CTD would “significantly accelerate” its growth among B2B clients and was finalized after “appropriate” due diligence with advisors.

Dan Coatsworth, investment analyst at AJ Bell, said that while Topps Tiles has staunchly defended its strategy, “with the share price near decade lows, there are cracks in the facade of the company’s argument.”

He added: ‘The current management maintains that they are taking part in a difficult market.

“However, doing less poorly than the competition is not the most compelling argument, even if it is valid.”

Topps Tiles Stock They were down 0.25 per cent at 39.9 pence at midday on Monday, taking their falls this year to around 18 per cent.