Temple & Webster swings back to growth but rough first half hits full-year profit

Temple & Webster swings back to growth but rough first half hits full-year profit

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Online furniture and homewares retailer Temple & Webster Group (ASX: TPW) may have swung back into growth mode during the second half, but the full-year FY23 result hasn’t been able to overcome the company’s depressed first-half performance.

Temple & Webster posted a net profit of $8.3 million for the year to the end of June, down from $11.96 million in FY22.

The 30 per cent fall in net profit came on the back of a 7.3 per cent drop in revenue to $395.5 million, which was a big improvement on the 12 per cent fall in revenue during the first half.

However, the company is hoping the worst is behind it after the rebound in sales during the June quarter continuing into the current quarter.

Temple & Webster has revealed that FY24 year-to-date revenue to 13 August is up 16 per cent.

“While the near-term macroeconomic climate will continue to put pressure on the sector, our business model, product offering, strong customer metrics and AI abilities give us confidence to aggressively go after market share in the near-term and deliver substantial longer-term benefits,” says CEO Mark Coulter.

The online retailer is focusing on further growth ahead, including an ambitious bid to drive sales to $1 billion over the next three to five years, a target that Coulter says the company is positioned to achieve as consumers tighten their belts.

“In this environment, shoppers are searching for quality items at affordable prices as cost-of-living pressures impact household budgets and it’s clear our agile range is resonating with consumers,” Coulter says.

“As the leading online-only furniture and homewares retailer, the market’s transition from offline to online presents a once-in-a-generation opportunity to become the top-of-mind brand in our category.

“Increasing scale will drive better financial returns, cost efficiencies and bigger budgets for marketing, people and technology, especially as we leverage our data and early adoption of AI.”

Coulter says the company’s focus over the next three to five years is to ‘accelerate our growth plans and build scale’.

“Our strong cash generation and healthy balance sheet provides us with an opportunity to gain market share, potentially even more efficiently given current economic conditions.”

Temple & Webster has revealed that revenue growth in the June quarter of FY23 was driven by both repeat and first-time customers with repeat customers accounting for 54 per cent of total orders. Revenue per active customer has also risen over the past year, up 6 per cent.

“Our inventory levels continue to be well managed and the business has never been in a stronger financial position,” Coulter says.

“We have room to deploy funds in support of our growth plans, but we will do this in a disciplined way, remaining profitable at all times.

“Our $30 million on-market buyback will continue to improve shareholder returns in the absence of more accretive opportunities, with 2.7 million shares bought back at a total cost of $12.3 million to date.

“We remain committed to our longer-term goal of becoming Australia’s largest retailer of furniture and homewares.”

 The company is not paying a final dividend.

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