Temple & Webster has beat sales forecasts as younger shoppers jump online

An army of millennials setting up their new homes is driving double-digit sales growth for online furniture retailer Temple & Webster.

Temple & Webster CEO Mark Coulter. Picture: Supplied

An army of millennials setting up their new homes, or adding to it as their families grow, are driving double-digit sales growth for online furniture retailer Temple & Webster.

But, these shoppers are still demanding value and low prices when it comes to picking out a new bed, coffee table or shelf.

Temple & Webster chief executive Mark Coulter said customers were looking for more value amid cost of living pressures and typically pouncing on purchases through promotional periods.

“While our less discretionary categories such as furniture categories are outperforming, you can definitely see the types of products people are buying (shows) people looking for value. So, for example, coffee tables, people still need beds and sofas but they may be looking for a more value option within those categories,” Mr Coulter told The Australian.

“The promotional periods are working very effectively, so products that are on sale are performing well. And, so people are more price conscious, I think those cost of living pressures are still biting but with Temple & Webster we have a good range at amazing value, so I think that’s why we’re doing well.”

Temple & Webster profits have risen off the back of millennials furnishing homes.

Temple & Webster on Tuesday posted record revenue for the December half and crossed over one million active customers using its website, as the pure-play online retailer boosted sales and profit despite the challenging economic environment.

Temple & Webster recorded sales of $253.8m, up 23 per cent, as interim net profit lifted 6 per cent to $4.12m. The growth in revenue was ahead of market expectations of 21 per cent gains. Pre-tax earnings of $7.5m for the half, up from $7.3m, came with margins of 2.9 per cent, which was at the top end of guidance forecasting margins of 1 to 3 per cent.

Consistent with previous results, it did not declare a dividend.

Shares in Temple & Webster rallied 11 per cent to $11.21 on the results and are up 122 per cent over the last 12 months. The stock enjoyed a strong rally in the early stages of Covid-19 as locked down shoppers went online and filled their homes, but then after the burst of activity its shares retreated.

Temple & Webster shares are up more than 1000 per cent since the company listed in late 2015.

Mr Coulter said the retailer delivered a record half in the face of some of the toughest headwinds its category has ever seen due to the current economic conditions.

“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 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.”

Mr Coulter said millennials were his fastest growing customer base and they were beating a path to the Temple & Webster website as they looked to furnish their homes.

“They are our fastest growing cohort and they are progressing through life stages of buying houses and moving houses, those life stages continue and those key events are a key furniture buying time and they are the generations who grew up online.

The strong momentum in the first half continued into the second half, the company said, with revenue from January 1 to February 11 up 35 per cent driven by both first-time and repeat customers.

At the end of the December half the company had cash of $114m and no debt.

Originally published as Temple & Webster has beat sales forecasts as younger shoppers jump online