UK's Topps Tiles sees strong start to new year as profits rise

LONDON, Nov 25 (Reuters) - Topps Tiles (LSE: TPT.L - news) , Britain's largest specialist tile retailer, said trading in its new financial year had started strongly as it posted its first rise in adjusted pretax profit since 2007.

The company, which has 327 stores and also sells flooring, said on Tuesday adjusted pretax profit rose to 13 million pounds ($21 million) for the year to Sept. 28, ahead of 12.8 million pounds a year ago and in line with analyst expectations.

Topps' profits have fallen by almost two thirds during the downturn as squeezed discretionary spend, low consumer confidence and a constricted housing market weighed on sales.

To help ride it out the firm improved its products and stores and, according to analysts, is well placed to benefit from an improving economy and recovering housing market.

The group said like-for-like sales in the first eight weeks of its new financial year were up 7.4 percent.

"While it is too early to confirm that this is a sustained trend, we are encouraged by this performance," Topps Tiles Chief Executive Matthew Williams said in a statement.

Revenue for the year to Sept. 28 was flat at 177.8 million pounds, the firm said, with like-for-like sales down 0.5 percent on 2012, however its gross margin rose from 60 to 60.2 percent.

Shares in Topps closed at 98 pence on Monday, having more than doubled in 12 months, valuing the business at 189 million pounds.