Topps Tiles has reported a slight decline in profits for the first half of its financial year, but says it is "encouraged" by trading patterns seen during the period.
The company saw a marginal decline in adjusted profit before tax, down to £7.2m (from £7.8m in 2010) for the 26 weeks to April 2, 2011.

While total revenue decreased by 2.5% to £89.2m (down from £91.4m in 2010), like-for-like revenues increased by 1.8%.

Chief executive Matthew Williams said: "I consider this to have been a robust performance, in light of the prevailing economic conditions and in comparison to our sector peers."

He added: "We are continuing to manage the business by balancing short-term constraints with longer term opportunities. Like-for-like sales growth across the period has given us confidence to continue investing in infrastructure to drive longer-term growth and to increase marketing spend to continue to promote our brand. Current trading results reflect a more cautious approach amongst our consumers but we remain confident that we will continue to deliver our financial and operational objectives."

In the first seven weeks of the second half, revenues decreased 2.1% on a like-for-like basis, but remained roughly in line with management expectations.

The report said: "The economic environment remains challenging for retailers and as a result we anticipate consumer confidence will continue to be subdued. Whilst we recognise that consumers are likely to face ongoing pressure on spending levels, we are encouraged by the trading patterns we have seen over the first six months of this financial year. Current trading, whilst slightly negative, is not significantly different from our expectations and the later part of the last seven weeks offers more cause for encouragement."

Gross margin for the first half was 59.7%, compared with 58.8% last year, driven by an improvement in foreign currency exchange rates and Topps' supplier tendering programmes.

Operating costs rose to £44.1m, up from £43.5m in 2010, mainly due to increased marketing spend, with around £1.3m spent on a national TV campaign.

Topps opened three new stores during the period, taking the portfolio to 312, and says new store openings will be "an important part of our growth strategy and we are keen to increase the pace." The company has set a target of around 10 net openings a year.

Construction has also begun on an additional warehouse at Topps' Lancashire headquarters, adding costs of around £1.6m during the period.

Online sales now represent around 1.5% of the group's turnover, said the report, which is the equivalent of the company's best performing store. Topps' is also set to launch a 'visualizer' on its website in the second half of the financial year, allowing customer to browse ranges, mix and match different styles, themes and colours and then complete their purchase online or in store.