Topps Tiles has defended itself after receiving criticism from its largest shareholder in regards to the firm’s direction and mismanagement.

In a letter published last week, the managing director of MS Galleon, which owns a 30% share in Topps Tiles, Piotr Lipko, said that the firm had made a number of "strategic missteps" recently.

He also went on to call for a review of the company’s leadership, citing a "complete failure" by management to "adapt to an evolving retail landscape".

However, Topps Tiles, which supplies tiles and associated products to the UK domestic and commercial markets, said that it was continuing to take market share in a "difficult trading environment".

It stated that its revenue had fallen by 5.4% in the last full financial year due to a "weaker consumer environment", while the UK tile market is estimated to be down by around 20% since 2019.

Despite this, the firm said that it had made "strong initial progress" against the five growth initiatives underpinning Mission 365, which is its strategic plan over the medium term to grow group sales to £365m, with an adjusted profit before tax margin between 8% and 10%.

Topps Tiles said that it has "invested significantly in expanding its digital operations" over the last five year, with the 18% of group revenues coming from online.

Chairman at Topps Tiles, Paul Forman, stated: "We engage with all our larger shareholders on a regular basis and listen closely to their views. Our strategy was reviewed in April and presented to shareholders in May, with further updates given last week. Further expansion of our digital capabilities is at the heart of many of these growth initiatives.

"Our latest results show that we continue to take market share, consistently outperforming the wider tile market despite very challenging trading conditions. We believe this demonstrates the effectiveness of our strategy, which has the full support of the board."

Despite the fight back from Topps Tiles, investment director at AJ Bell, Russ Mould, noted that this has not done much to convince shareholders.

He concluded: "Topps Tiles may have delivered a defence of its strategy in the face of brickbats from its largest shareholder MS Galleon but with the share price close to decade lows there are cracks in the facade of the company’s argument.

"The deal to acquire rival outfit CTD from administration may have felt like an opportunistic move but it also drew fire from MS Galleon for a lack of due diligence and suggestions that Topps overpaid. It is also now mired in a probe by the competition authorities.

"Topps refutes these criticisms of the deal and the acquisition could ultimately prove to be a successful one. However, it could take time to demonstrate its merits.

"MS Galleon previously tried to oust chair Darren Shapland in 2022, and while he survived the vote, he stood down the following year. The current management argue they are taking share in a difficult market. However, doing less badly than the competition is not the most compelling argument to make, even if it is a valid one."

---