Temple & Webster profits surge after bumper half

Online furniture and homewares retailer Temple and Webster has reported a six-fold increase in profit for the half-year as the company continues to ride a COVID-induced surge in sales.

Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 556 per cent to $14.8 million for the six months to the end of December, the company told shareholders on Tuesday.

Temple & Webster chief executive and co-founder Mark Coulter said the business would look to use some of its $85 million in cash to reinvest in the business to cement its gains in market share.Credit:Daniel Munoz

Sales more than doubled when compared to the prior corresponding period, up 118 per cent to $161.6 million, though this signified a slowdown from earlier in the half where revenue was up as much as 160 per cent. The number of active customers shopping at the e-tailer also doubled to 687,000.

The business’ selection of homewares and furniture, especially office furniture, has been popular during the pandemic as many Australians spent most of their time at home and opted to shop largely online.

Shares in the retailer have boomed nearly 300 per cent since February last year thanks to its rapid growth.

“While 2020 remained a challenge for the country, we are proud that many Australians continued to turn to Temple & Webster for their furniture and homewares needs,” chief executive Mark Coulter said.

“It is great to see our revenue growth translating into operating leverage and significant profit growth. This allows us to accelerate our investment into areas such as data, technology, private label and brand awareness to further differentiate our proposition.”

Temple and Webster currently ships 75 per cent of its product from international suppliers, but the company is looking to expand its higher-margin private-label range, investing $13 million in the segment over the half.

Growth at the business has continued into the new year, with January revenue up over 100 per cent. Mr Coulter said the business would look to use some of its $85 million in cash to reinvest in the business to cement Temple and Webster’s gains in market share.

RBC Markets analyst Tim Piper said the overall result was slightly below market expectations, but noted the business’ investment into private label products seemed to be a sensible one.

“We think Temple and Webster will continue to benefit from the significant acceleration in online penetration rates in the category, growing market share for TPW, other tailwinds such as higher discretionary incomes on the back of ongoing travel restrictions through 2021,” he said.

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