Topps Tiles war of words with largest shareholder heats up

Topps Tiles has rejected calls from its largest shareholder for a management shake-up amid claims of a “complete failure” to adapt to the demands of modern retail.
The retailer was responding to criticism from Piotr Lipko, managing director of the Austrian investor MS Galleon, who wrote to the Topps Tiles chairman Paul Forman last week to question the direction of the business.
Lipko asked for a leadership review following what he described as “strategic missteps” from management, with claims that Topps bosses had demonstrated a “complete failure to adapt to an evolving retail landscape’’. He also said he was “frustrated” over an alleged failure to engage with major shareholders.
MS Galleon, which owns 29.9 per cent of the business, is also critical of the £9 million acquisition of CTD Tiles, which it has described as “unequivocally irrational”.
However, in a statement to the market, Topps insisted its approach is robust and that it is taking market share in a “difficult trading environment”.
It said that since 2019, while the UK tile market has contracted by about 20 per cent, the company’s sales were flat if the contribution of acquisitions is stripped out. Including acquisitions such as that of Pro Tiler, an online rival, sales are up by 15 per cent over the period.
It said it was making “strong initial progress” on a plan to grow sales and improve profit margins.
In results published last week, Topps Tiles said same-store or “like-for-like” sales fell by 9.1 per cent but it noted that the wider market had seen larger dips in revenue.
Over the past five years, shares in the company have fallen by 46 per cent.
The retailer said it had “invested significantly in expanding its digital operations over the last five years and the business is truly omnichannel, with 18 per cent of group revenues coming from online”.
Forman said: “We engage with all our larger shareholders on a regular basis and listen closely to their views.
“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.”
MS Galleon responded that the statement showed “management are incapable of recognising the seriousness of the current situation” and again criticised a “lack of vision and strategy” in the business.
Lipko said that Topps Tiles is “nowhere near being ‘a truly omnichannel’ business,” adding: “We are yet to see them ‘listening closely’ to what we have to say.”
He said the online sales referenced by Topps Tiles were “almost exclusively derived from Pro Tiler, a separate, online pure play business bought two years ago as part of a costly acquisition”.
Lipko added: “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.
He said the retailer, which sells tiles and flooring from 301 stores, had overpaid for 30 CTD stores and the deal “makes no strategic sense”.
Lipko said: “This lack of vision and strategy to transform into a modern, omnichannel, online-driven business is largely the reason for the current poor state of the business.”
Shares in Topps Tiles were flat on Monday afternoon at just under 40p.