Sales still booming through lockdown for Temple & Webster

Online furniture specialist Temple & Webster says the new financial year has started strongly, gaining momentum through the final months of lockdowns.

Temple & Webster CEO Mark Coulter: ‘We continue to experience strong tailwinds, including the ongoing adoption of online shopping.’

Online furniture specialist Temple & Webster says the new financial year has started strongly, with year on year revenue growth of 56 per cent and the retailer expecting pre-tax earnings within the previously stated range of 2 to 4 per cent growth.

It has gained momentum in the final months of the most recent lockdowns in NSW and Victoria. The double-digit sales growth compares to 49 per cent revenue growth for July to August and 39 per cent for the first three weeks of July.

However, the question for investors and analysts is whether discretionary spending now directed to home furnishings will be rerouted to travel and other experiences as the country comes out of lockdowns and domestic and international borders are opened.

Chief executive Mark Coulter told shareholders at the annual general meeting on Monday that first-half earnings before interest, tax, depreciation and amortisation (EBITDA) were expected to be higher than the 2-4 per cent growth level. “We continue to experience strong tailwinds, including the ongoing adoption of online shopping due to structural and demographic shifts and an acceleration of these trends due to Covid-19,” Mr Coulter said.

“A buoyant housing market and a reduction in travel spend are also supporting the growth of our sector.”

He said that while the end of lockdowns would no doubt see the world return to a more “normal” distribution of discretionary spending, there was still significant growth ahead for Temple & Webster as it continued its “march up the online adoption curve”.

“Temple & Webster is a long-term growth story and periods of above and below average growth are to be expected.”

RBC Capital Markets analyst Chami Ratnapala said the 56 per cent sales growth since the start of fiscal 2022 implied strong trading in August and September, which the analyst estimated as up 60 per cent and 80 per cent, respectively.

“The current run-rate is tracking ahead of RBC Capital Markets estimates and consensus, although we were sitting below consensus,” she said.

“While the remainder of the first half should see continuing positive trends given the strong housing and renovation market trends and the structural benefits to Temple & Webster, we also see risks related to offline shopping by consumers as lockdowns conclude, redirection of discretionary spending into travel with easing of restrictions and industry wide supply chain impacts on availability of product range.”

Shares in Temple & Webster fell 37c to $13.04.