Dear Investor,
On behalf of the Directors and senior management team, I am delighted to share with you the remarkable journey of the Temple & Webster Group Ltd (the "Group") and provide insight on the future plans to establish a profitable business of scale.
The Group was founded in 2011 by Mark Coulter, Adam McWhinney, Conrad Yiu and Brian Shanahan, a group of Australian entrepreneurs formerly with eBay Australia and Newscorp Australia's digital division who were passionate about bringing together magazine quality content to online retail in the furniture and homewares segment. The founders had a vision to create the first place Australians turn to when shopping for their home.
The Group consists of leading brands:
These brands are highly complementary. Temple & Webster offers more than 130,000 products searchable in Australia's largest furniture & homewares e-commerce website, overlaid with a beautiful 'discovery' shopping experience, limited-time offers and style inspiration. Adding the full private label range of products produced and imported by Milan Direct consolidates Temple & Webster's category dominance, it offers the increased margins of a private label brand and Milan Direct's reputation in commercial fitouts for office and hospitality.
The Group operates in the Australian online market for furniture and homewares. Sales in the Australian furniture and homewares segment were estimated by Euromonitor to be approximately $12.6 billion in CY15. Euromonitor estimated Online Penetration in the segment at only 4% in the same period which compares to other retail segments in Australia such as apparel and footwear, which Euromonitor estimated had 9.7% Online Penetration in CY14. Online Penetration in the Australian furniture and homewares segment also lagged international markets such as the US, which Euromonitor estimated to be 9.5% in CY14 and the UK, which they estimated at 12.8%.
The Directors believe the combination of the two brands operating within the
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online platform will allow the Group to service a wide range of different customer types and needs, and be an attractive distribution partner for a wide range of suppliers. The Group will also benefit from insights and efficiencies across the buying, marketing and supply chain functions. The Group's growth to date has been primarily driven by the execution of its strategy, the underlying growth of online retail and the shift of offline spend to online spend within the furniture and homewares segment.
The funds raised under the December 2015 IPO provided the Group with the opportunity to acquire Milan Direct, fund working capital to grow the Group's platforms and allow early stage investors to realise part of their investment. The existing investors, founders and other members of the senior management team have retained significant ownership interests in the Group and remain focused on leading the Group on its continued growth journey.
The Board and leadership team remain focused on the opportunity to establish a profitable business of scale through investment in marketing, people and innovation, and to benefit from the ongoing shift from offline to online. The Group's ongoing commercial growth strategy will focus on; broadening marketing channels and building brand awareness for continued organic growth to strengthen the market leading position; through accelerating top line growth through access to a wider and deeper product range and permanent lines; and through realising synergies across the Group's people, processes and technology skillsets. The Group continues to benefit from the experience and energy of the founders who remain active in the business and the team that they have surrounded themselves with.
The Directors and senior management team look forward to welcoming you as a shareholder.
Yours faithfully,
Stephen Heath
Chairman
