Topps Tiles PLC reported on Tuesday a tumble in profit in its half-year from the impact of inflation, though the company had a positive outlook for the second half of the year.

The Leicestershire-based retailer said pretax profit for the half-year that ended April 1 fell 70% to £1.7 million from £5.6 million a year ago. The company said this was due to ‘adverse exchange rate movements’ and the expected impact of inflation year on year which had significantly increased energy costs and other one offs.

The company said that profit was also impacted by a non-cash holiday pay accrual of £900,000 which will reverse in the second half of the year.

Revenue was up by 9.3% to £130.3 million from £119.2 million, which Topps Tiles said reflected its ‘successful development and diversification’.

The company declared an interim dividend of 1.2 pence per share, a 20% rise from 1.0p a year prior.

Looking forward, the company expects profits to materially increase in the second half of the year and fully expects to perform in line with current market expectations. The headwinds facing the company in supply chain, inflation, and recruitment are easing, which the company says is strengthening its confidence for the second half of the year.

Chief Executive Rob Parker said: ‘These effects are now reducing or will reverse in full in the second half, underpinning our confidence in a much stronger profit performance in the balance of the year.

‘Our strong trading, when combined with our successful strategy, world class customer service, leading protection offer and strong balance sheet, gives us increasing confidence in our outlook.’

Topps Tiles shares were 4.7% higher at 53.00 pence on Tuesday afternoon in London.

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