Tile Shop flexes its muscle amid retail shakeout as profits up 19%

Home improvement stores bucked the retail gloom last year, and the newest results from Tile Shop Holdings Inc. show they might do it again.

The Plymouth-based retailer on Tuesday reported a 19 percent jump in profit and 5 percent gain in comparable-store sales during the first three months of the year.

The company's performance is being shaped by strong home sales across the country and a burst of innovation in tile designs, particularly a porcelain tile that simulates the look of wood.

"The company had a very solid start to the year. We're pleased with every metric that we track," Chris Homeister, Tile Shop's chief executive, said in an interview.

In particular, he noted that comparable-store sales continued to rise after big gains last year. In the first quarter last year, Tile Shop reported comparable-store sales growth of 13.2 percent. "We're lapping a very strong year and the numbers continue to move in the right direction," Homeister said.

Tile Shop said it earned $8 million in the first three months of the year, up from $6.8 million in the same period a year ago. Revenue was $92.1 million, up nearly 9 percent.

Its shares rose 8 percent Monday to $21, the highest level since December.

Homeister said the company is stocked well with wood-like tile, a trendy design spotted in many renovations on Twin Cities Parade of Homes in recent weeks.

"One of the most popular applications is a place where you wouldn't get wood before, in the bathroom," he said. "It's really a stunning look that we've tried to showcase."

Consumers tend to shop for tile infrequently, typically before selling a house or just after buying one. "When someone hasn't shopped for tile for awhile, they are very surprised at the innovations," Homeister said.

He and other executives said the company is on target to meet projections for 2017 that they laid out three months ago, including a 40 percent increase in full-year earnings per share.

Tile Shop opened three stores during the quarter, bringing it to 126 stores in 31 states. It expects to add nine to 12 more the rest of the year.