Topps Tiles has pushed back against demands from its largest shareholder for a management overhaul, amid concerns regarding its ability to adapt to modern retail demands.

This response follows criticism from Piotr Lipko, the managing director of Austrian investor MS Galleon, who reached out to Topps Tiles chairman Paul Forman last week regarding the company’s strategic direction.

Lipko called for a review of leadership after labeling management’s actions as strategic missteps, claiming that Topps Tiles exhibited a “complete failure to adapt to an evolving retail landscape.” He expressed frustration over what he perceived as insufficient engagement with major shareholders.

Owning 29.9 percent of the company, MS Galleon is particularly critical of Topps Tiles’ £9 million acquisition of CTD Tiles, which it has deemed “unequivocally irrational.”

In contrast, Topps Tiles assured the market that its strategies are sound, stating that it continues to gain market share even in a challenging trading environment.

The retailer pointed out that while the UK tile market has shrunk by approximately 20 percent since 2019, its sales have remained stable when excluding acquisitions. When including acquisitions like Pro Tiler, an online competitor, sales have reportedly increased by 15 percent over the same period.

Topps Tiles claimed to be making “strong initial progress” on initiatives aimed at boosting sales and enhancing profit margins.

In its recent financial results, Topps Tiles reported a 9.1 percent decline in same-store or “like-for-like” sales, although it acknowledged that the overall market experienced even steeper revenue drops.

Over the last five years, the company’s shares have plummeted by 46 percent.

The retailer noted significant investments in its digital operations over the last five years, highlighting that 18 percent of its overall revenues are now generated from online sales.

Forman stated, “We regularly engage with all our major shareholders and place a strong emphasis on their perspectives.” He further emphasized that recent results illustrate how the company continues to gain market share, outperforming the broader tile market despite difficult conditions, which he believes reflects the effectiveness of their strategy, fully supported by the board.

In response, MS Galleon argued that Topps Tiles’ statement indicates a managerial disconnect regarding the severity of the current situation, pointing to a perceived “lack of vision and strategy.””

Lipko remarked that Topps Tiles is “nowhere near being ‘a truly omnichannel’ business” and criticized them for not adequately listening to shareholder concerns.

He asserted that the online sales figures cited by Topps Tiles primarily stem from Pro Tiler, a distinct online business acquired two years ago.

Lipko described Topps Tiles as mainly a traditional retail operation, noting a poorly optimized store portfolio that was recently written down by £19.4 million according to last week’s results.

He further commented that the retailer had overpaid for 30 CTD stores, questioning the strategic rationale behind the acquisition.

Lipko concluded that the absence of a clear strategy aimed at transforming Topps Tiles into a modern, omnichannel, online-focused business is a key factor contributing to its current struggles.

Topps Tiles shares saw a slight increase of 0.5 percent, closing at 40p on Monday.