The Temple & Webster Group Ltd (ASX: TPW) share price surged almost 14% in today’s early trade. Shares in the online retailer rocketed after announcing the completion of its capital raise.
Why did Temple & Webster raise capital?
Earlier today Temple & Webster released an announcement informing the market that the company has successfully executed a $40 million share placement. The company placement of 7 million new fully-paid ordinary shares issued at $5.70 per share saw strong investor demand.
The company raised new capital to increase financial flexibility and continue the structural shift online, despite being debt-free with around $30 million in cash. Temple & Webster management noted that the capital raise will allow the company to make further investments in its growth strategy, whilst also improving its technology, product and service offerings.
How has Temple & Webster performed during the pandemic?
In a brief business update released yesterday, Temple & Webster acknowledge that strong demand has continued into June with gross sales to the 28 June surging 130% year-on-year. In mid-June, the online retailer reported a 668% increase in year-to-date EBITDA of $7.1 million. Additionally, Temple & Webster reported a 68% increase in year-to-date revenue of $151.7 million.
Temple & Webster has thrived during the coronavirus pandemic with many shoppers switching to online channels during the lockdown period. The company noted strong operating leverage, reporting a 68% increase in active customers of 440,257 YTD, up from 335,000 at the end of December.
The company is confident consumers who started shopping online during the pandemic will continue shopping online, even when all stores reopen. As a result of changing consumer preferences and demographics, Temple & Webster looks to continue its sales growth by investing in longer-term initiatives.
Foolish takeaway
Temple & Webster is Australia’s largest online retailer of furniture and homewares, boasting more than 150,000 products for sale. The company is able to offer a broad product range thanks to its innovative drop-shipping model. This model allows products to be sent directly to consumers from suppliers.
Temple & Webster shares fell as low as $1.57 during the market sell-off in March but have rebounded strongly. At the time of writing the company’s share price is trading near all-time highs around $7.
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More reading
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- Temple & Webster shares continue to grow despite coronavirus restrictions
Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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