Rising freight rates an issue for furniture retailer Temple & Webster

Sales growth for the online homewares and furnishings retailer has slowed since August, with the company also saying rising freight costs are impacting margins.

Temple & Webster chief executive Mark Coulter.

Online homewares and furnishings retailer Temple & Webster has reported slowing sales growth since August, but says it has continued to deliver significant market share gains despite cost of living pressures.

The online retailer also reported margins being impacted by rising freight rates, an issue called out recently by furniture retailer Nick Scali at its annual general meeting last week.

Providing a trading update to investors at its annual general meeting on Monday, Temple & Webster reported year-to-date sales growth from July 1 to October 24 of 21 per cent with good momentum in leading indicators for the retailer such as average order values back to growth and around 60 per cent orders now from repeat customers.

However, the 21 per cent sales growth for the start of fiscal 2025 was down markedly from sales growth of around 26 per cent for the first six weeks of 2025, with analysts estimating that growth in the next 11 weeks had declined to around 18 per cent.

Temple & Webster is expecting a strong November sales period.

Shares in Temple & Webster fell just over 4 per cent to $12 in early trade on Monday.

“(Analyst) consensus has 25 per cent growth in the first half of 2025 which now appears optimistic,” said RBC Capital Markets analyst Wei-Weng Chen.

Citi analyst James Wang was more upbeat about the trading update, saying the slower growth was against much stronger rates of growth for the same period last year.

“The moderation for exit sales run-rate is concerning but the period is partly cycling a very strong 42 per cent trading update. Underlying momentum actually improved,” he said.

Further, as part of the Temple & Webster trading update, the retailer said it remained on track to achieve its medium-term target of $1bn in annual revenue within three to five years from 2023.

It has also reconfirmed its forecast EBITDA margin guidance for the full year of 2025 of 1 per cent to 3 per cent.

Temple & Webster said it expected the November and Black Friday sale period to keep increasing in importance in the retail calendar, especially for online shopping.

As at the AGM, Temple & Webster had more than $100m in cash and no debt.

In August the online retailer posted record revenue of $498m for fiscal 2024, up 26 per cent, but profit sank by nearly 79 per cent to $1.8m as it invested in growth opportunities. The bottom line was also hit by a $4.7m writedown in its investment in an Israeli AI company, with Temple & Webster building its own in-house AI and tech team.

The group reported an underlying earnings margin of 2.6 per cent, excluding one-off costs, which was within its target range of 1 to 3 per cent.

Originally published as Rising freight rates an issue for furniture retailer Temple & Webster