Topps Tiles says board supports strategy after top investor’s criticism

By Aby Jose Koilparambil

(Reuters) -Britain’s Topps Tiles said on Monday its strategy, primarily focused on expanding the retailer’s online businesses, had the “full support of the board”, responding to a letter expressing discontent from its top investor.

In the letter dated Nov. 28 – reported by The Times on Sunday and seen by Reuters on Monday – the managing director of MS Galleon complained of long-term margin erosion at the group and its “complete failure” to adapt to a changing retail landscape.

It also termed the company’s recent acquisition of CTD Tiles as “unequivocally irrational” and “highly detrimental” to its interests.

MS Galleon, which is Topps Tiles’ biggest shareholder with a 29.9% stake, said on Monday the company’s response only “heightened concerns”, saying its management was “incapable of recognising the seriousness of the current situation”.

“The reality is that Topps Tiles is predominantly a bricks and mortar business with a poorly optimized store portfolio,” its managing director Piotr Lipko said in an emailed statement to Reuters.

Shares in Topps Tiles fell as much as 2.5% in early trade before paring losses to trade 0.3% lower at 1023 GMT.

“We engage with all our larger shareholders on a regular basis and listen closely to their views,” Topps Tiles chairman Paul Forman said in a statement on Monday.

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

In May, Topps Tiles unveiled its new growth strategy, with a focus on growing its online business and expanding into the market for hard wall and floor surface coverings and related products.

Last week, Topps Tiles posted a roughly 50% slump in annual profit on weak demand in the home repair and maintenance sectors.

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Savio D’Souza and Jan Harvey)