Shares in Topps Tiles surged 5 per cent after the retailer said soaring like-for-like sales meant that its interim results would top City forecasts.
The group, whose customers have caught the home decorating fever which is sweeping the country, said its pre-tax profits for the six months to 3 April would be about £15m, “significantly” ahead of expectations.
Analysts rushed to upgrade their full-year profit forecasts by up to 30 per cent, with Seymour Pierce raising their estimate for 2004 to £28m from £22.25m and for 2005 to £32m from £25m.
The retailer saw turnover reach £227.5 million in the 53 weeks to October 2, with comparable sales up 19.6% from the prior year, and 6.3% above the year before that, pre-Covid.
Topps Tiles was among firms to benefit from people embracing DIY during the pandemic. It expects profits for the financial year just ended to be slightly above the £13.6 million analysts had pencilled in.
The firm added that it has invested in higher levels of inventory, which it believes is “a significant competitive advantage in a market which is facing well-documented supply chain challenges”.
Elsewhere in the DIY sector, venture capital firm Beringea said it has led a £2 million investment into London-founded online retailer Plank Hardware.
The funding will be used towards investing in marketing and tech at the company, which sells products such as door knockers and wardrobe handles.
The start-up was launched in 2019 by Tom Revill and Annie Aveyard.
The company said that underlying sales during its first half had risen by 20 per cent, accelerating from the 15 per cent growth reported after Christmas. Barry Bester, the co-chairman, said that high house prices were deterring people from moving but encouraging them to spend more on their existing properties. Second bathrooms, en-suite bathrooms and a shift from “soft” flooring – carpets – to floor tiles and wooden floorboards were all behind the soaring growth, he said.
Although the rise was achieved despite tough comparatives the previous year, Mr Bester cautioned against expecting such stellar growth in the remaining six months of its financial year. “You can’t go on doing 20 per cent forever. Can you?” he said. Mr Bester also said that the group, which trades from 205 sites, saw potential to increase its estate to 350 by opening about 24 new shops each year.
The company, which has seen its share price more than double in the past 12 months, is planning a share split in an attempt to boost liquidity and attract investors put off by the current price level. Its shares climbed 33.5p to 706p.
Emma Biasiolo, investment manager at Beringea, said: “Annie and Tom have tapped into a clear demand for stylish, on-trend design at an affordable price point, and they are rapidly establishing Plank Hardware as the go-to brand for home décor hardware. Beringea has backed the significant potential of the founders, and the growing opportunity in DIY and home renovations.”
Topps, whose co-chairmen, Stuart Williams and Mr Bester, founded the group, and whose board holds 23 per cent of its equity, expects to announce either a three-for-one or a four-for-one share split alongside its interim results in May.