Online furniture and homewares retailer Temple & Webster (ASX: TPW) has defied weaker consumer sentiment to post record revenue for the first half of FY24 with profit margins hitting the top end of forecasts.
Temple & Webster has announced a 23 per cent increase in revenue to $254 million driven by growth in repeat and first-time customers.
“This was in the face of some of the toughest headwinds to our category we have ever seen due to the current economic conditions,” says CEO Mark Coulter.
“Pleasingly, our growth was driven by both first-time customers and repeat customers, which led to us crossing the one million active customer mark in February this year.”
The surge in revenue led to a 6 per cent increase in bottom-line profit to $4.125 million, aided by EBITDA margin of 2.9 per cent which is at the top end of the company’s full-year guidance.
The strong result comes on the heels of furniture retailer Nick Scali (ASX: NCK) surprising the market last week with a better-than expected profit for the six months to the end of December.
Temple & Webster’s sales momentum has picked up in the second half with trading up 35 per cent in the six weeks of 2024 to 11 February.
The growth, if it continues at this pace, puts the company on track to meet its target announced last year of hitting $1 billion in annual sales within the next three to five years.
Among the key strategies outlined by the company to deliver shareholder growth is to generate the majority of its revenue from exclusive products and to scale up its home improvement and trade and commercial divisions.
“We are making good progress against each of our strategic priorities,” says Coulter.
“This half we commenced our first integrated above-the-line brand campaign, with promising early results, including a significant increase in our share of branded searches.
“Our private label division launched 500 new products across all of our key categories, and we have increased exclusivity of our best-selling products.”
Coulter says Temple & Webster will continue to invest in AI and data capabilities, while retaining ‘our market leading conversion rate among the retailers dedicated to the home’.
“Both of our longer-term growth plays delivered double-digit growth, while our fixed cost as a percentage of sales decreased even after investment in our team.”
Coulter says the company’s goal is scale ‘as quickly as possible’ while remaining profitable.
“Our EBITDA result of $7.5 million for the first half of the year, even after costs associated with the above-the-line brand investment, gives us confidence to invest in growth to take further market share,” he says.
“The online market remains under-penetrated in Australia, and we continue to take advantage of this once-in-a-generation opportunity to capitalise on the long-term structural shift to online.”
Meanwhile, the company announced that Mark Tayler will resign as chief financial officer after eight years in the role.
However, Tayler will remain with Temple & Webster, focusing on investor relations and helping drive the group’s growth strategy.
“I’m excited to be staying with the company and helping it achieve the next big milestone of $1 billion in sales,” says Tayler.
Temple & Webster shares were trading 56c, or 5.6 per cent higher, at $10.58 at 10.55am (AEDT).
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