UK's Topps Tiles warns of lower profit margins on cost headwinds

(Reuters) - Topps Tiles said on Wednesday it expects annual gross margins to be "moderately lower" compared with last year, as the British tile retailer battles higher shipping and input costs.

"Global supply chain challenges, higher staff absence due to COVID-19, and material cost price inflation continue to provide significant headwinds," Chief Executive Officer Rob Parker said in a statement.

The company, which focuses on renovation, maintenance and improvement of homes in the United Kingdom, also said it had passed on the higher costs to consumers, but selling prices would increase by a lower percentage than cost prices.

Topps Tiles' retail like-for-like sales for the 13 weeks ended Jan. 1, 2022 rose 1%, compared with a 20% rise in the year-ago period.

The company added that it was holding higher levels of inventory than it has done historically, to mitigate supply chain challenges.

(Reporting by Priyanshi Mandhan and Yadarisa Shabong in Bengaluru; editing by Uttaresh.V)