Topps Tiles' Dutch subsidiary is "unlikely to be able to continue trading on a going concern basis" after Topps withdrew support and funding from the loss-making business.
The Dutch subsidiary, which comprises 12 stores made a loss of £4.9m during the last financial period, despite bringing in 4% of the group's revenue in 2009. The 308 stores in the UK will not be affected.
A statement issued by Tops Tiles said there is likely to be about a .£1m one-off non cash write down impacting the group's results as a consequence of the withdrawal from the Dutch market.
The statement explained: "The board of Topps undertook an extensive review of the Dutch business during 2008 and 2009 during which time the management team of the Dutch business was reorganised and it became apparent that significant structural issues needed to be addressed.
"The restructuring of the business on a financially sustainable basis has not been successful and the business has faced increasing challenges as financial performance has declined, in part driven by the difficult economic climate. The business has been loss making since 2008 and current trading is significantly behind revised financial targets set by the local management team.
"This has been a difficult decision for the Board to take, but it believes that this is the right course of action, as any further investment in the Dutch business is not economically viable and would not be in the best interests of the UK parent company and its shareholders."