E-commerce success story continues for Temple & Webster

E-commerce success story continues for Temple & Webster

Amidst a surge in online shopping and home renovations, it's been a story of back-to-back success for Temple & Webster (ASX: TPW).

The online-only furniture retailer, which saw profits spike sixfold in the December half, today laid out how sales momentum continued in the six months to 30 June.

"Once again Temple & Webster has delivered a record result. Revenue grew 85 per cent across the year driven by strong growth in new and repeat customers and average order values," Temple & Webster CEO Mark Coulter said.

"While lockdowns during FY20 and FY21 have accelerated the underlying shift from offline to online, pleasingly we continue to see strong growth even when comparing against COVID impacted numbers."

The company's EBITDA also soared 141 per cent year-on-year to hit $20.5 million - up from just $2.3 million in the first half of FY20.

Growth has continued into the beginning of FY22, although not at the eye-watering rates detailed in the FY2021 report today. For the period 1 July through 24 July, TPW saw a year-on-year revenue growth of 39 per cent.

TPW's drop shipping model, which it said has reduced the need to hold inventory and allowed for a larger product range, has been a key factor behind its success. Its private label range, though, now delivers improved profit margins - and has grown to make up just over a quarter of orders.

The company attracted an influx of new customers, seeing active users swell by 62 per cent to 778,000. According to Coulter, TPW's strategy is focused on keeping those customers satisfied and engaged.

"While the start of FY22 has been difficult for many Australians, we remain focused on delivering a great experience for our customers, built around the biggest and best range of furniture and homewares, combined with inspirational content and services and a great delivery experience and customer service," he said.

That strategy includes ramping up investment in interactive online shopping. In H22021, the company launched an augmented reality (AR) pilot that allows customers to preview furniture before buying, with plans to progressively expand and roll out the initiative.

Just as ambitiously, the company has increased investment into an unnamed Israeli artificial intelligence (AI) interior design firm, which it hopes will soon bring to life what it dubs a "3D-generated, life-like room".

The company's iOS and Android apps, which were launched in June last year, have been so far proved a hit with users.

With an average rating of 4.8 stars across 4,000+ reviews, the FY2021 report noted those apps are leading to higher levels of engagement and repeat purchasing.
According to company figures, mobile now contributes to the majority of orders (excluding trade and commercial).

The furniture giant's COVID success story also mirrors that of other listed e-commerce players like Kogan (ASX: KGN) and MyDeal.com.au (ASX: MYD).

Alongside the encouraging results in FY22 thus far, Temple & Webster sees market tailwinds such as an increase in discretionary spending due to travel restrictions, strong housing market growth, and an increased adoption of online shopping due to demographic changes.

The company says it will look to continue to funnel investment into growth areas of the business, with the ultimate goal of becoming the largest retailer (online and offline) for furniture and homewares in Australia.

TPW shares are up 7.15 per cent at $12.44 per share at 12:14pm AEST.

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