Topps Tiles defends the strategy amid a critical letter from a prominent investor
- MS Galleon owns a 29.9% stake in Topps Tiles, Britain’s largest tile retailer
- Letter blasted Topps Tiles for its “disastrous” acquisition of CTD Tiles
Topps Tiles has hit back at 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 percent stake in Britain’s largest tile retailer, warned the company was in “significant danger” of losing further market share to rivals.
In one open letter written by its director, Piotr Lipko, the Vienna-based company blamed Topps’ leadership for multiple “strategic missteps and operational failures.”
Lipko claimed the company had shown a “complete inability” to adapt to the changing retail environment and a “persistent lack of commitment and willingness” to listen to MS Galleon’s concerns.
He also slammed Topps Tiles for its “disastrous” takeover of CTD Tiles, whose brands and intellectual property, along with 30 stores, were bought out of administration in August.
It urged the company to conduct a “comprehensive review” of its leadership and strategy to help create a more omnichannel and singularly focused business.
Boardroom row: Topps Tiles battles its largest shareholder MSG, which has called for the removal of its chairman and the appointment of two representatives to the board
The letter was published two days after results showed Topps Tiles had fallen to a pre-tax loss of £16.2m in the year ending September 28, following a 9% decline in like-for-like revenue .1 percent.
MS Galleon said the group’s sales were comparably weaker than peers such as Wickes, Victorian Plumbing and Screwfix owner Kingfisher.
In response, Topps Tiles noted that like-for-like sales had remained stable since 2019, despite the wider UK tile market shrinking by around 20 percent over the same period.
Paul Forman, chairman, said: ‘Our latest results show that we continue to gain market share and consistently outperform the wider tile market, despite very challenging market conditions.
“We believe this demonstrates the effectiveness of our strategy, which has the full support of the board.”
Under its ‘Mission 365’ strategy announced in May, Topps Tiles is targeting annual turnover of £365 million and adjusted pre-tax margins of between 8 and 10 percent in the medium term.
The Leicestershire-based group hopes to achieve this by focusing on new product categories, boosting B2B sales and developing its online Pro-Tiler and Tile Warehouse businesses.
It said the acquisition of CTD would “significantly accelerate” growth among B2B customers and was completed following “appropriate” due diligence with advisors.
Dan Coatsworth, investment analyst at AJ Bell, said that while Topps Tiles has vigorously defended its strategy, “with the share price near a decade low, there are cracks in the facade of the company’s arguments.”
He added: ‘Current management claims they are gaining market share in a tough market.
‘Performing less poorly than the competition, however, is not the most convincing argument, even though it is a valid argument.’
Topps Tiles Stock were 0.25 percent lower at 39.9 cents on Monday afternoon, bringing their decline this year to about 18 percent.
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