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Topps Tiles to stock up on best-selling lines before Brexit

By Noor Zainab Hussain and Tanishaa Nadkar

(Reuters) - Britain's Topps Tiles (TPT.L) plans to invest 3 million pounds on stocking up on its most popular products to shield it against supply chain disruptions from Brexit.

Britain's biggest tile retailer, which has around 370 stores, also reported lower annual pretax profit and a decline in sales over the last few weeks, sending its shares as much as 4.5 percent lower to 63 pence.

Topps is one of many British companies preparing for the risk of interruptions to the flow of goods and parts across borders once Britain leaves the European Union next March.

"In terms of mitigating the potential downside from the supply issue, we'll have around another six weeks of our stocks. The lines that make up 80 percent of our sales ... the top 100 lines," Chief Financial Officer Rob Parker told Reuters.

Topps Tiles, which sells bathroom, wall and floor tiles said Brexit could also hurt consumer confidence, denting sales and could cause staffing problems from a smaller labour pool.

Topps Tiles said adjusted pretax profit fell 14 percent to 16 million pounds for the year to the end of September as Britons curbed discretionary spending and a bitter winter and unusually hot summer combined to keep shoppers out of stores.

The uncertain economic outlook has also weighed on the property market, leading Britons to put off major renovations or buying new houses.

To boost margins and market share, Topps Tiles has launched new products and invested in promotions to attract customers. It has also expanded into the commercial tile market to cater to bigger clients such as house builders and architects.

"We are seeing some competitors on the retail side leave the market, which gives us an opportunity to take market share," Chief Executive Officer Matthew Williams said.

Topps Tiles said like-for-like sales for the first eight weeks of the new financial year fell 1.9 percent, as challenging conditions persisted. Analysts saw potential benefits from the increased attention on the commercial market.

"While short term earnings will be led by the consumer business, medium term profits should soon start to benefit from the commercial opportunity," Peel Hunt analysts said.

(Reporting by Noor Zainab Hussain and Tanishaa Nadkar in Bengaluru; Editing by Bernard Orr/Keith Weir)