By Carrie LaFrenz
Sales at Temple & Webster, Australia’s largest online furniture and homewares retailer, rose by almost a quarter over the last six months, driven by a big increase in purchases of sofas and bathroom fixtures.
The result was better than brokers had expected and followed a softer period at the start of the financial year. Sales had picked up, the retailer told investors, to reach $313.7 million in the six months to December 31.
Analysts had forecast sales of $310.2 million.
Temple & Webster sells more than 200,000 products, operating a platform that allows hundreds of suppliers to ship directly to customers.
The bullish update from Temple & Webster comes after a long period of sluggish growth among big retailers as consumers spend more on their mortgages and less on other purchases.
But the Reserve Bank of Australia is expected to cut interest rates next week, with investors tipping any easing in mortgage repayments will supercharge spending this year.
Temple & Webster chief executive Mark Coulter presented shareholders with a broadly positive picture of spending, saying that the growth in demand was from both new customers and returning ones. He said while shoppers had put off purchases of art and mirrors, for instance, they were still buying big ticket items.
“If you think about what are the items that you really need to live, you need a bed base, and you need a sofa, you need a coffee table. And you need a bathroom tap,” Mr Coulter said. “We are definitely selling bigger ticket items. That’s why our average order value is going up.”
The retailer intends to increase its home improvement ranges such as bathroom fixtures and ceiling fans since that category is recording the fastest growth.
Temple & Webster said on Thursday that earnings had risen to $13.2 million, up from $7.5 million, for the first half of the financial year. Earnings margins of 4.2 per cent were well above the top end of its full-year guidance range of 1 per cent to 3 per cent. Net profit more than doubled to $9 million.
Investors looked past a weaker start in January, pushing Temple & Webster shares 13 per cent higher to $16.14 yesterday. They have jumped almost 50 per cent over 12 months.
Wilson Asset Management investment analyst Shaun Weick attributed the share price rally to Temple & Webster’s higher margins over the period.
“[Temple & Webster] is telling you: we think we’ve got flexibility; we are seeing tangible benefits from AI in terms of the cost base; and we have the marketing lever to pull in response to top-line trends,” he said.
Consumers would be even more confident if interest rates fell, he added.
Mr Coulter said any rate cut would help the housing market, and in turn, send consumers looking for furniture.
“There’s a lot of uncertainty in the retail environment that’s due to the cost of living, but also the federal election coming up, and Trump and everything else. I think you won’t see too many retailers with these kinds of numbers in this environment,” he said.
The company is on track to grow annual revenues to $1 billion over time, with Temple & Webster’s market share now sitting at 2.9 per cent.
Mr Coulter said he was seeking to make a more personalised experience with every shopper by using artificial intelligence, which is testing now. The aspiration is to personalise everything from the home page to the different categories, pricing, orders and emails.
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