Temple and Webster: As good as it gets?




Is this as good as it gets for online furniture and homewares retailer Temple and Webster?

The group Tuesday reported a sixfold increase in profit for the December half-year thanks to its continuing ride in the COVID-driven jump in online buying.

The retailer told the ASX that earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 556% to $14.8 million for the six months to the end of December.

That will see the company easily top EBITDA for 2019-20 of $8.5 million

Sales more than doubled when compared to the prior corresponding period, up 118% to $161.6 million, though this was much a slower growth rate than in the early months of the half when sales were growing by 160%.

The half revenue figure was almost equal to 2019=20’s full year total of just over $176 million.

But directors remain upbeat about the rest of the year, telling the market that the second half “has started strongly, with January’s revenue growth tracking in excess of 100%.”

"We will continue our reinvestment strategy, investing into growth areas of the business to cement our online market leadership and drive market share,” directors said.

How much in excess wasn’t given but from now on the company, like so many of its peers will comparing current sales (and earnings) with a period in 2020 when they surged strongly as COVID hit and the economy was locked down.

T&W grew revenue in 2019-20 by 74%, with second half revenue up 96% and 130% growth reported for the June, 2020 quarter.

Going on those figures the final quarter of this financial year is where Temple & Webster will see revenue slow sharply.

CEO Mark Coulter said in Tuesday’s release; "While 2020 remained a challenge for the country, we are proud that many Australians continued to turn to Temple & Webster for their furniture and homewares needs. It is great to see our revenue growth translating into operating leverage and significant profit growth.

"This allows us to accelerate our investment into areas such as data, technology, private label and brand awareness to further differentiate our proposition”.

“Our strategy of being a category specialist, with a clear customer offering built around the biggest and best range of furniture and homewares in the country, combined with the most inspirational content and services and a great delivery experience and customer service, is working.

"The advantages of being the online market leader are apparent as we continue to grow our market share” said Coulter.

The company had more than $85 million in cash on hand at the end of December, more than double the $38 million at the end of last June.

No mention of a dividend.

The shares fell 4% to $10.59 in what could be a sign of investor belief that the days of rapid growth in online spending are over and it's back to the trenches.