The boom for online furniture and homewares group Temple & Webster has well and truly turned to bust as the company saw a 46% rise in revenues for the six months to December become a 40% drop in net profit.
The company spent more on marketing and consulting services in the half year as net earnings dropped to $7.2 million, a fall of 40.2%.
From what the company said in the ASX release that extra spending is aimed at future trading – a form of reinvestment in itself.
On a pre-tax basis, which accounts for favourable deferred tax assets in the years prior, earnings were down 26.8% to $10.6 million.
The increased spending came on marketing and reinvestment into new areas of the business, such as the B2B and home improvement divisions.
Temple & Webster also increased its spending on consultants by over 200% to $2.3 million for the half.
“Over the half, we also accelerated our investment into our future growth horizons and delivered some impressive growth in those nascent opportunities. This included our Trade & Commercial (B2B) division growing 49% and our new home improvement offering growing 95%. In addition to these areas, we continue to invest into our brand awareness, technology & data teams, logistics services and our content & merchandising capabilities,” according to CEO Mark Coulter.
Revenues for the six-month period surged 46% surge to $235.4 million as the company added more active customers, which totalled just over 900,000 by the end of the half.
That’s an annual sales figure of close to half a billion dollars which remains the strongest part of the TPW story.
Temple & Webster shares ended the day up more than 9% at $8.83. They had peaked at $15 in trading towards the end of August last year but then turned down amid the confusion over the ending of the Covid delta lockdowns and then the further confusion generated by the current omicron wave.
T & W has also seen its margins pressured by higher distribution costs increased caused by the supply chain disruptions affecting retailers and distributors, especially importers where freight costs remain high.
Looking to the coming year (and the June half) the company warned it would likely wear even more costs in the current half.
“Despite all the challenges that COVID continues to throw at the world, including significant disruptions to global supply chains and domestic logistics, Temple & Webster continues to outgrow the market, while keeping our customers very happy,” CEO Mark Coulter said in the ASX release.
Sales have continued to grow through January to February 6, up 26%.
The company did not declare a dividend.
