Topps Tiles' shares are floored

The country's biggest tile and wooden flooring retailer warned profits will be smaller than expected after a collapse in consumer confidence meant DIY spending was put on hold, causing sales to dive.

Topps Tiles' revenues plunged by 10.4% in the first seven weeks of its fourth quarter, a sudden lurch from the 1.9% decline recorded in the three months.

"We've seen a step down in consumer confidence since the beginning of July," chief executive Matt Williams said.

"Footfall is down. Some commentators are saying we never really came out of recession. We're now at similar [trading] levels as 2008 and 2009."

Topps employs 1600 in the UK and Williams admitted jobs will be lost. "We're re-looking at the cost base," he said.

"With fewer sales in store, it's difficult to argue with the logic that we need fewer people to service those sales.

"Payroll is our main controllable cost. But it will be natural attrition rather than redundancies."

Topps has suffered from the slow housing market, as well as an unsuccessful venture into Holland in recent years. It tried to boost sales with a TV advertising campaign, which put up costs by £1.3 million in the first six months of this year.

The shares fell 11.5p to 35p.