Lockdown dividend for Temple and Webster

Everything Temple and Webster touches turns to gold as the retailer wins big on the back of Covid-19.

Temple & Webster CEO Mark Coulter

New kid on the furniture block Temple and Webster has reaped a Covid dividend from a nation confined to their homes and away from international holidays.

The retailer, founded in 2011 and listed in 2015, has romped home a 118 per cent growth in revenue for the half on the same time last year.

Earnings at the furniture and homewares retailer was nearly four times higher than the same time last year. Profit after tax leapt to $12.2m for the half from $2.9m the year before.

Temple and Webster has been riding the wave along with other homewares retailers Nick Scali and Harvey Norman.

Few could have missed the double page spreads from the retailer, along with Harvey Norman, that have graced the pages of some of Australia’s most read newspapers.

Temple and Webster has spent big on advertising during the Covid stay-at-home boom, with spending on marketing ballooning from $8.2m in 2019 to $20.6m.

A major TV campaign launched on June 20 saw a major boost in brand awareness.

Covid-19 supercharged Temple and Webster repeat and first time customer numbers, which leapt from a steadily growing rate in March, to put active customers at 678,000.

However, overall active customer spend has not moved significantly, only growing 6 per cent to $401 in the half.

The turnaround in the fortunes of the retailer comes after several years of losses in its early days.

The retailer continues to carry forward $37.9m in losses on its balance sheet.

The retailer, which sells more than 210,000 products sold across 211 categories across its platform, has continued its push to increase the number of private label sales.

Private label sales increased to 25 per cent for the half, up from 18 per cent in the first half 2020.

No dividend was declared.

The retailer forecasts strong tailwinds to continue its drive into the furniture and homewares market, with ongoing travel restrictions continuing to bolster customer spend.

Shares in the retailer slid 7.88 per cent on the results announcement, and closed 6.6 per cent lower at $9.60 on Thursday.

But Royal Bank of Canada Capital Market analyst Tim Piper maintained his $13 price target, with an outperform rating.