Temple & Webster Recovers, Eyes Profit

By Glenn Dyer | More Articles by Glenn Dyer

Online homewares retailer Temple & Webster seems to have survived its near death experience last year, reporting a smaller loss for the year to June and maintaining earlier forecasts of making its first profit in 2019.

The company floated in 2015 and nearly got lost after more than $30 million in losses and write downs in calendar 2016. But it said yesterday operating losses halved in 2016-17 as it cut marketing and head office costs.

Temple & Webster said it lost $7.8 million in the 12 months to June against losses of $43.5 million in 2016, when the e-commerce company booked more than $30 million in costs associated with its float, refinancing costs and impairments.

Losses before interest tax depreciation and amortisation fell from $14.8 million to $6.8 million, with second-half losses trimmed to just $1.8 million compared with $7.2 million previously, the company said yesterday.

At one stage last year Temple & Webster was widely regarded as one of the worst floats in recent years after reporting losses of $44 million on sales of $62 million in 2016 and losing $14.8 million at the earnings before interest, tax, depreciation and amortisation line – almost twice the $8.5 million loss forecast in its prospectus.

But it survived and its survival is in stark contrast to the collapse this week of online surfwear retailer, Surfstitch slid from one crisis to another in the past year and could never get clean air to stabilise and attempt a turnaround.

Temple & Webster did by taking any early axe to costs and its structure and business model so that said sales for the year to June from continuing operations rose 11% to $64.5 million, at the top end of the company’s recent guidance.

During the year the company shut its Milan Direct website, integrating it with the Temple & Webster site to cut costs and focus on a single brand.

The company also cut marketing, distribution and head office costs, tightened promotions, struck better terms with suppliers and ended the free (but expensive) shipping offer on bulky items.

Customer acquisition costs fell to $59 from $89 (per purchase) and advertising costs improved to 12.7% of sales from 19.4% by holding the spend steady on expanding sales..

“We had a great finish to the 2017 financial year, with the Group’s EBITDA loss for the second half reducing to $1.8 million, from $7.2 million in the prior year corresponding period,” CEO Mark Coulter said yesterday.

"As a result, the fourth quarter was the group’s first cashflow positive quarter and the strongest quarter in our turnaround journey to date."

"We continue to remain confident of reaching profitability during calendar 2018 with 2019 being our first full year of profit," he said.

Temple & Webster’s cash balance has fallen from $12.5 million at the end of December to about $8.7 million, but Mr Coulter says he is comfortable it has sufficient cash reserves to meet current plans.

The shares closed down 1.6% at 30 cents, two cents under the high for the year hit last Friday.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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