Topps Tiles has announced that a credit insurance company has withdrawn cover to its suppliers.
In a statement released today, the company said the insurer had taken the decision as a result of: "a review of its exposure to the retail sector in light of the uncertain outlook for the UK economy".

The move caused the company's share price to drop 14.1% earlier today to 18.25p, which, said Reuters, valued the company at about £32.2m.

However, the company was keen to stress that the insurer's withdrawal has not impacted its relationships with key suppliers, all of whom "remain supportive of the business". The statement went on to say: "The Board do not believe a material number of the company's other suppliers rely on credit insurance and hence the Board do not believe any further withdrawal by providers in relation to Topps will have a material impact upon the company."

It also scotched assumptions about its cashflow by stating that its lending banks remain supportive, that it has undrawn overdraft facilities and that it continues to generate cash at an operating level.

The news, said directors, "has not had an impact on the Board's expectations for the trading performance of the business in the current financial period."

The company announced in January that profits had fallen 18.3% for the first 13 weeks of the current financial year. This followed news in Topps' last full financial figures, that turnover had seen a slight increase for the 12 months to September 2008. However, the same period saw pre-tax profit fall almost 27% from £37.8m to £27.7m.