Temple & Webster lays out growth plan
Online homewares retailer Temple & Webster is looking to ramp up its marketing spend and invest in new parts of the business, including delivery, after reporting its first profitable half since launching in 2011.
The retailer reported $72.6 million in revenue in FY18 after revenue accelerated 25 per cent year-on-year in the second half.
It narrowed full-year EBITDA losses to $600,000 from $6.8 million in FY17, and closed the year with $9.9 million in cash.
This marks a significant turning point for the e-commerce company, which posted a $44 million loss in FY16, more than double what it forecast in its prospectus.
Over the past two years, Temple & Webster co-founder and CEO Mark Coulter has overseen a cost-cutting strategy to stabilise the business and improve margins, including integrating the Milan Direct brand into the business.
Now that the company is profitable, it can begin spending again. In a presentation to investors, Temple & Webster said it will focus in the short term on improving its core offering around range, inspiration and service and testing future growth plays, including showrooms and click-and-collect. In FY19 and beyond, it will focus on accelerating top-line growth and investing in marketing.
Some of the areas of investment include a mobile app with visual search functionality, due to come out later this year, and a fleet of in-house delivery vans to bring down the cost of delivering bulky goods.
The retailer also laid out plans to expand its private-label offering and add free design help for customers through chat, voice, in-store service and augmented reality.
Temple & Webster is also banking on aging millennials and the relatively underdeveloped online furniture market to fuel future growth.
The retailer noted that only around 4 per cent of Australia’s $13 billion furniture market is currently online.
As the leading online furniture retailer, Temple & Webster stands to profit as millennials, who are currently between 22 and 35 years old, age into its core customer demographic of people aged 35 to 65 years.