Topps Tiles surges in Q2 with booming trade sales and digital leap—what’s driving the rebound?

Topps Tiles Plc, the United Kingdom‘s leading tile specialist, reported a significant acceleration in like-for-like sales growth in the second quarter of its 2025 financial year, underpinned by strong momentum in trade sales and an expanding digital footprint. The company, which has been strategically repositioning itself through its “Mission 365” growth plan, posted first-half sales of £127.7 million, up 4.0% year-on-year, excluding contributions from CTD Tiles, whose performance remains under regulatory scrutiny.

This growth marks a notable achievement given subdued macroeconomic conditions and cautious consumer spending patterns. While trading began slowly in January, momentum steadily improved, culminating in a high single-digit increase in underlying sales in March compared to the prior year. The Group’s Q2 underlying growth of 4.4% surpassed Q1’s 3.3%, with adjusted figures accounting for holiday timing effects.

Topps Tiles’ core retail brand reported underlying like-for-like sales growth of 3.7% in the second quarter, lifting the half-year performance to 3.0%. However, consumer-facing homeowner activity remained subdued. The rebound was instead driven largely by robust trade sales, supported by improved digital capabilities and product category diversification.

What role did trade customers and digital innovation play in Topps Tiles’ growth?

A critical component of Topps Tiles’ performance improvement has been its increased reliance on trade customers, whose resilience to inflation and broader economic uncertainty continues to support steady demand. Total trade sales within the core brand rose by 12% year-on-year in the first half, while the active trader base grew 11% to 146,000.

The Group’s digital strategy under the Mission 365 framework is showing tangible results. Digital sales advanced 15% in H1, with online trade traffic increasing approximately fourfold. Topps Tiles is investing in a new customer engagement platform and a trade-specific app—set to launch in 2025 and 2026 respectively—to better serve this growing customer segment. These platforms aim to streamline procurement and order tracking for contractors, tilers, and SME builders.

By integrating digital tools into the physical retail experience, Topps Tiles is modernising how trade professionals interact with the brand. The increased engagement from this cohort is not only raising transaction volumes but also enabling the business to better forecast demand and tailor inventory accordingly.

How are Topps Tiles’ newer brands and logistics operations contributing to performance?

The Group’s diversified brand portfolio continues to gain traction. Pro Tiler Tools and Tile Warehouse, both acquired or developed in recent years, recorded strong year-on-year growth. These brands cater to specialist installers and price-sensitive consumers respectively, aligning with the broader trend toward B2B e-commerce and value-based shopping.

Logistically, the business achieved an important milestone with the successful ramp-up of its new 140,000-square-foot warehouse in Northampton. The facility has enhanced the company’s distribution capabilities and played a pivotal role in supporting Pro Tiler Tools’ robust sales growth. Additionally, the centralisation of CTD Tiles’ supply chain operations at this site allowed the Group to close legacy CTD warehouse locations, improving operational efficiency.

The Northampton hub also positions Topps Tiles to better manage future sales growth and category extensions. The recent introduction of splashbacks and acoustic panels in-store highlights the company’s effort to expand its relevance in interior surface solutions beyond traditional tiling.

What is Mission 365 and how is it guiding strategic transformation?

Mission 365 is the Group’s long-term growth agenda, built around customer engagement, digital expansion, operational efficiency, and product innovation. A key part of the strategy is enhancing gross margins, particularly in a trade-heavy sales mix that tends to compress profitability. The company has recently reviewed its product pricing, mix, and promotional discounts, resulting in an improvement in gross margins despite continued growth in lower-margin trade sales.

Progress has also been made in defining the Group’s B2B strategy, aimed at capturing commercial and professional demand across retail, installation, and design sectors. Marketing platforms and core enterprise systems are undergoing upgrades to support this shift, equipping the business for scale and future acquisition integration.

Product range expansion remains an active area of focus. By adding adjacent categories such as acoustic solutions, the company is leveraging its physical footprint and brand recognition to upsell and cross-sell. These moves not only attract new customer segments but also increase average transaction values.

What financial headwinds is Topps Tiles facing in 2025?

Despite operational progress, the Group continues to face macroeconomic headwinds that could impact profitability in the near term. From April 2025, rising National Living Wage and National Insurance obligations are expected to increase the Group’s annualised cost base by approximately £4 million. Combined with seasonal energy usage, strategic investments, and the timing of Easter, these factors will concentrate profit delivery into the second half of the year.

Calendar shifts also affected reported quarterly sales. The first quarter benefited from fewer Christmas holiday days, while the second quarter was negatively affected by Good Friday falling into Q3. After adjusting for these effects, underlying Group sales growth for H1 stands at 3.9%, with Q2 outperforming Q1 at 4.4% and 3.3% respectively.

What’s the status of the CTD acquisition and leadership transition?

Topps Tiles’ acquisition of CTD Tiles remains under review by the UK Competition and Markets Authority (CMA). The regulator has now given in-principle approval to the Group’s proposal to divest four stores, thereby avoiding a more detailed Phase II investigation. Although CTD’s financials are excluded from the latest report, operational integration continues, with supply chain consolidation already implemented at the Northampton facility.

On the leadership front, the Group is actively searching for a successor to outgoing CEO Rob Parker. It reported receiving strong interest and is progressing with the selection process. Parker, who has overseen the execution of Mission 365 and the CTD acquisition, noted that strategic initiatives are beginning to deliver measurable benefits.

How is Topps Tiles Plc performing on the stock market, and what are analysts saying?

Topps Tiles Plc trades on the London Stock Exchange under the ticker LON:TPT. As of April 3, 2025, the company’s share price closed at 32.80 pence, up 3.47% on the day. Shares have traded between 28.05 pence and 49.60 pence over the past 52 weeks, reflecting investor caution amid operational adjustments and macroeconomic pressures.

The stock has a price-to-earnings ratio of 13.26 and offers a dividend yield of 7.32%, which may appeal to income-oriented investors. However, broader sentiment remains mixed. Major shareholder MS Galleon, which holds a 29.9% stake, has previously expressed concerns over the Group’s strategic focus and the execution of the CTD acquisition, raising questions around governance and long-term direction.

Analysts have adopted a cautious outlook, highlighting both the company’s execution risks and its potential upside from digital and trade-driven growth. The consensus leans toward a ‘Hold’ recommendation, with some suggesting a wait-and-see approach as the Group navigates regulatory, cost, and strategic transition challenges.

For current shareholders, retaining positions may be prudent, especially given the upcoming half-year results announcement on 20 May 2025, which will likely offer more clarity on margin sustainability and digital revenue momentum. Prospective investors may prefer to monitor developments around leadership changes, trade margin resilience, and CTD integration outcomes before initiating new positions.

With a clear strategic plan, improving trade metrics, and growing digital engagement, Topps Tiles Plc is positioning itself for long-term relevance in a changing retail and construction landscape. However, cost pressures, regulatory complexity, and investor scrutiny may temper short-term optimism. The balance of disciplined execution and margin protection will be critical in sustaining investor confidence as Mission 365 unfolds.