Shares in Topps, which has its finance, administrative and IT headquarters in Cheadle Hulme, fell 11 per cent after the company scrapped its annual dividend payment in order to reduce its £92m net debt, and said pre-tax profits for the year to September 27 fell to £27.7m from £37.8m a year earlier.
Chief executive Matt Williams blamed the fall in home sales for the company's recent trading pressures.
"Business is tough at the moment," he said. "We are a discretionary spend: people don't have to buy tiles."
But he said average spend was £250, and homeowners would do more of their own home improvements as they realised they were unable to sell their properties.
"I think we are still yet to fully go into that phase of the downturn, when people really come to terms with that."
Mr Williams said Topps had doubled the size of its value ranges and offered a 30 per cent discount when people bought more than four square metres of tiles, with an extra 10 per cent discount when people bought adhesive and grout.
Topps said like-for-like sales had fallen 18.3 per cent in the first seven weeks of the new financial year, from September 27.
Seymour Pierce said recent sales falls were `eye-catching' and exceeded the broker's forecast of a seven per cent drop.
Analyst Freddie George added: "There should, however, be no surprises in the statement that the dividend was passed and the net debt remained above £90m."
The group's revenue in the last financial year was flat at £208.1m, while like-for-like sales were down 5.4 per cent on 2007.
Topps, which grew its UK stores base over the year by 19 outlets to reach a total of 320, said it would not be looking to expand much more in the coming year, but would concentrate on existing stores.
However, Mr Williams said: "There's real opportunity there, with the local independents, who have roughly 38 per cent of the market, going out of business. It is a real opportunity for Topps."
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