Topps defends strategy after being slammed by biggest shareholder

Topps Tiles has hit back at criticism from its largest shareholder over the retailer’s strategy and accusations of a series of blunders by management.

Piotr Lipko – managing director of Austrian investor MS Galleon, which owns a 30% stake in Topps Tiles – wrote to Topps Tiles bosses last week calling for a leadership review, claiming management have made a raft of recent “strategic missteps”.

In the letter, he said also bosses at the retail chain had shown a “complete failure to adapt to an evolving retail landscape” and failed to engage with major shareholders.

But Topps responded, arguing that it had taken share in a difficult market, which has been hit by a slump in demand for home improvement.

Results last week showed its profit nearly halved over the past year, with same-store sales at Topps Tiles slumping by 9.1%, but it said the wider market had seen double-digit declines in sales.

Paul Forman, chairman of Topps, said: “Our strategy was reviewed in April and presented to shareholders in May, with further updates given last week.

“Further expansion of our digital capabilities is at the heart of many of these growth initiatives.

“Our latest results show that we continue to take market share, consistently outperforming the wider tile market despite very challenging trading conditions.

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

He added: “We engage with all our larger shareholders on a regular basis and listen closely to their views.”

MS Galleon also heavily criticised Topps Tiles’s acquisition of CTD Tiles, blasting the move as “unequivocally irrational” and “highly detrimental to the interest of the company”.

Topps Tiles bought CTD’s brand, 30 stores and some of its stock and two distribution sites out of administration in August.

CTD ran 86 stores across the UK and employed 425 staff before its collapse.

Topps insisted in its response to MS Galleon that the CTD acquisition was completed after “appropriate due diligence”.

It said: “The CTD acquisition is strategically compelling as it is a trade-focused brand which will significantly accelerate the group’s growth in the commercial market.”

But Mr Lipko stepped up the group’s campaign for change at Topps, saying the retort from the retailer “only serves to heighten our concerns that Topps Tiles’ management are incapable of recognising the seriousness of the current situation”.

He said: “The reality is that Topps Tiles is predominantly a bricks and mortar business with a poorly optimised store portfolio that was written down by £19.4 million at last week’s results.

“Overpaying for 30 CTD stores makes no strategic sense at a time when the business should be focused on adapting to the evolving retail landscape by investing in its digital capabilities.”

Annual results from Topps last week laid bare how tough trading has been for the firm.

The firm reported underlying pre-tax profits of £6.3 million for the year to September 28, down from £12.5 million the previous year.

The group also cautioned over a difficult 2025 for extra costs, with the Budget measures adding an extra £4 million to its wage bill through the National Insurance Contribution (NIC) increase and rise in the minimum wage from next April.

It added that, combined with wider general inflation, its overall costs are set to swell by around £5 million.

But it said that sales had returned to growth in the first eight weeks of the new financial year, up 1.2% excluding CTD, though Topps Tiles comparable store sales were still lower, down 0.4%.