Online homewares retailer Temple & Webster is on track to return its first full-year of profit in fiscal 2019, reporting a 39 per cent year-on-year increase in year-to-date trading at its annual general meeting on Tuesday, November 27.
The company said that contribution margin, which is margin minus all variable costs, such as marketing and customer service, is within its target range of 16-17 per cent.
Temple & Webster’s strong start to the year stands a sharp contrast to predictions of the impact of the housing downturn on consumer sentiment.
In a recent report, Citi said it expects the housing slowdown to have a negative impact on sales for all retailers, but said that furniture, hardware and white goods would be most exposed.
Temple & Webster co-founder and CEO, Mark Coulter, however, was optimistic.
“While the broader furniture and homewares market category may be impacted by these market conditions, we remain confident that online penetration of the category will continue as the oldest millennials turn 35 this year and enter into Temple & Webster’s core customer demographic of 35-55 year-olds,” he said in a statement released after the AGM.
“Millennials have grown up with the internet and already make a significant number of their purchases online in other categories such as fashion and home electronics, and we expect this behaviour to continue for our category, regardless of what happens in the broader housing market.
“We also expect to benefit from a customer shift towards more value-based retail offers, and Temple & Webster’s positioning around affordable beauty offers great value to our customers.”
Coulter provided an update on several key growth drivers for the business in FY19, including range expansion into DIY and small appliances, Temple & Webster-branded delivery, augmented and virtual reality-based shopping features and international expansion.
After flagging a plan to launch in New Zealand earlier this year, Coulter said the brand is currently in test mode on the TradeMe platform and expects to go live in the third quarter of FY19.
“Marketplaces provide a relatively low risk way of entering new markets, and we believe Temple & Webster’s range and content experience is an offering which should work in other markets,” he said.