Online homewares retailer Temple & Webster is off to a strong start in its first fiscal year of profitable trading.
After reporting $72.6 million in revenue in FY18 and a profitable second half with $300,000 EBITDA, Temple & Webster said sales are accelerating in July and August.
The retailer reported a 34 per cent year on year increase in sales in July and said the positive momentum has continued into August. It remains confident that it will deliver its first maiden full-year profit in FY19.
“The next phase of our journey is all about growth, and it is great to see that our revenue growth has accelerated into the new financial year. With only [about ] 4 per cent of furniture and homewares being currently purchased online, we are well placed for strong growth for years to come,” Temple & Webster CEO Mark Coulter said.
According to research from IBISWorld, Temple & Webster is Australia’s biggest online retailer of homewares and furniture.
The retailer is looking to cement this position by targeting millennial customers, who it notes are beginning to age into the time of their lives when spending on furniture and homewares increases.
Temple & Webster’s growth initiatives include the launch of a mobile app this year, international expansion through a New Zealand pilot, expanding into new categories such as home improvement and further investing in its B2B and commercial division.
Coulter said he was proud to have kept his promise to shareholders of reaching profitability in calendar year 2018, without having to raise additional capital.
The retailer nearly broke even in FY18, ending the year with a net loss after tax of just $21,000. It ended the 12 months to June 30 with $9.9 million in cash, the first time the company has been cash-flow positive since listing in 2016.
The results were achieved primarily through cost cutting and smarter spending, with key metrics like cost per first-time customer falling to $54 in the second half of FY18, down from $58 in the first half, and advertising cost as a percentage of sales improving from 12.7 per cent to 11.2 per cent.
Gross margin improved from 42.7 per cent to 44.2 per cent in FY18.
“The work performed on resetting the cost base, improving our gross margins and shipping costs, reducing our cost per first-time customer and offshoring our customer care and other support staff has now set the business up for profitable growth,” Coulter said.
“Importantly, we achieved our breakeven milestone through strong growth in both active customers and revenue in the second half.”
Temple & Webster raised revenue 25 per cent year on year in the second half of FY18.