“With the recent acceleration in this trend, we think it is financially prudent for the company to strengthen its balance sheet to provide us with the flexibility to make additional investment into our growth, including our technology and product and service offering.”
The company said it had backed an unnamed offshore startup developing artificial intelligence interior design tools, in which it has made a “small investment” and also struck a new commercial agreement with the business to bring its tools to the Australian market. The company said it had been presented with a number of other investment opportunities in recent months.
RBC Capital markets analyst Tim Piper told clients he expects the business will focus its investment on areas such as customer service, distribution and product range.
Temple We&bster has been a prime beneficiary of the online shopping surge brought about by the coronavirus pandemic, with the company telling investors earlier this month its sales for the five months to the end of May had nearly doubled, up 90 per cent to more than $77 million.
Shares soared following the announcement and they have continued a run with the price surging more than 300 per cent since the market’s lows in March, valuing the company at just over $700 million.
The company said on Wednesday the sales boost had continued into June, with trade up 130 per cent for the month. It now expects its full-year earnings before interest, tax, depreciation and amortisation (EBITDA) to be around $8 million, an eightfold increase from last year’s $1.1 million.
Mr Piper said the trading update showed momentum had continued to be very strong through June and believed the company was very well-placed to benefit from a broader shift online.
“While we see a strong structural tailwind as sales shift online, there is also material upside in our view as Temple & Webster drives greater brand awareness, repeat purchase behaviour and expands the product offering,” he said.