Temple & Webster furniture sales reinforced but profits still not nailed down

Temple & Webster furniture sales reinforced but profits still not nailed down

Temple & Webster CEO, Mark Coulter

Temple & Webster (ASX: TPW) today announced a drop in profit despite soaring revenues over the half-year ending December 31.

Revenue at Australia’s largest online-only retailer of furniture and homewares rose by 45.7 per cent against 1H21 to a record $235 million, tripling the growth in revenue over the past two years.

However, net profit fell 26.8 per cent from $14.5 million in 1H21 to $10.6 million in 1H22, which the e-commerce store says was a consequence of its reinvestment strategy to build further growth.

“Despite all the challenges that COVID continues to throw at the world, including significant disruptions to global supply chains and domestic logistics, Temple & Webster continues to outgrow the market while keeping our customers very happy," Temple & Webster CEO Mark Coulter said.

Although the Sydney-based company's revenue rose significantly, the cost of sales increased by a more significant margin, rising 47.2 per cent to $129.7 million over the same period.

Distribution costs rose by 68.3 per cent to $34 million, advertising and marketing rose by 54.6 per cent to $32 million, and wages rose 48 per cent to $13.2 million against 1H21 results.

This was likely due to several factors, including the ongoing supply chain disruptions the industry currently faces. Temple & Webster report its supply chain diversity is mitigating against short term disruptions and allows it to scale sustainably during COVID periods.

As the company continues to grow, associated expenses also rose as hosting and IT expenses climbed 77.8 per cent to $2.7 million and consulting expenses rocketed 208 per cent to $2.3 million.

In positive news for Temple & Webster, active customers grew 34 per cent to 906,000, reflecting growing brand awareness which was up 61 per cent. The business has 3.8 million subscribers, 915k combined social media followers and hosts 3.9 million website users on average per month.

Temple & Webster has invested heavily in core new growth areas such as B2B and home improvement. Trade and commercial revenue grew by 49 per cent while home and improvement revenue rose by 95 per cent, reflecting the movement to home working for many employees during lockdown periods.

The business announced a closing cash balance of $105.5 million and no debt, but no dividend was declared.

January sales (1 January to 6 February) have increased by 26 per cent against the same period in 2021, representing a solid start to the second half of FY22.

Growth remains a key focus for Temple & Webster in the future, with plans to expand digital capabilities, increase brand awareness, and grow the private label division.

The Temple & Webster (ASX: TPW) share price was up 12.24 per cent in early morning trading as of 11.20 AEST.

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