Covid furnishes online retailer Temple & Webster with stellar growth

Momentum has helped push shares in Temple & Webster almost 500 per cent higher in the past 12 months.

Temple and Webster CEO Mark Coulter

Online furniture retailer Temple & Webster is enjoying boomtime sales conditions through the COVID-19 pandemic, reaping more earnings between July and September than it did for the ­entire 2020 financial year.

Addressing shareholders at the company’s annual meeting on Wednesday, chief executive Mark Coulter provided a trading update that revealed the rocketing sales and profits it had enjoyed throughout fiscal 2020 was continuing into the new 2021 ­financial year.

This momentum has helped push shares in Temple & Webster almost 500 per cent higher in the past 12 months as it leads a vanguard of online retailers benefiting from consumers locked up at home and turning to online shopping to update their homewares and furniture.

Mr Coulter said Temple & Webster was winning over customers even though it had many competitors who were investing heavily in their online platforms.

“The good news is that we are growing our market share even as our competitors take online more seriously,’’ he said.

“Even though the world is in uncertain times, we remain committed to our longer-term strategy of investing to ensure Temple & Webster is the brand for the next generation of furniture shoppers.

“We want Temple & Webster to be the first place Australians turn to when shopping for their homes and work spaces. We believe that online shopping habits are being formed right now, and provided we keep putting the customer at the heart of everything we do, those habits will remain.”

Mr Coulter said fiscal 2021 had started strongly with high growth continuing to deliver operating leverage. Year to date revenue (July 1 to October 19) was up 138 per cent.

First-quarter 2021 earnings before interest, taxation, depreciation and amortisation was $8.6m, more than the full year for fiscal 2020.

He said October revenue growth was still in excess of 100 per cent, and contribution margins continued to run ahead of the company’s 15 per cent target.

“Most of our efforts during the second half concentrated on scaling the business. We worked hard to ensure all of our key vendors were stable; we deployed our buying teams to work with onshore and offshore suppliers to secure stock; we added 180 people across the business, all while moving to a work-from-home environment both onshore and offshore.”

Temple & Webster raised $40m in July to secure the balance sheet and provide the company with flexibility to act on strategic opportunities.

Active customers grew 77 per cent year-on-year to almost half a million, with growth across both first-time and repeat customers.

Mr Coulter said he was most proud of the fact the company was able to achieve this growth while improving customer satisfaction to record levels.

“We want to ensure the customers who are trialling online shopping for their homes for the first time have a great experience with us and come back,” he said.

Mr Coulter said the core furniture and homewares category was a $15bn market, with accelerating online adoption.

“While the Australian online retail market continues to grow, it remains underpenetrated compared to other markets. Lock-downs and forced offline retail closures have no doubt accelerated the adoption of online shopping. These trends were already at play as the oldest Millennials enter their prime furniture buying years (35-65 years).

“This generation of shopper has already adopted online shopping in other ­categories such as fashion and appliances, and we believe the furniture and homewares category is next.”

Shares in Temple & Webster closed at $11.62, down $2.41.