Retail sector woes continue after online icon slumps

Poor consumer confidence continues to weigh on Australian retailers, after online seller Temple & Webster's profit tumbled, despite record revenue.

The online furniture and homewares group posted a bottom-line net profit of $4.3 million for 2025/26, down 62 per cent from the year before.

The business delivered record revenue of $665 million, up 11 per cent, driven by higher average order value and a 4.6 per cent increase in active customers.

"This result was delivered in the face of a challenging consumer environment, which continued to soften for the last few months of the financial year," executive chair Mark Coulter told an earnings briefing on Wednesday.

The gap between revenue and profit reflected tax timing, marketing spend, and the group's expansion into home improvement and the New Zealand market.

For the new financial year so far, trading has been sluggish, with revenue down 13 per cent on a year earlier as living costs, high interest rates and a housing market downturn continue to weigh on consumer spending.

In 2025/26, pre-tax cash flow grew 17 per cent to $21.9 million, representing a margin of 3.3 per cent, driven by pricing structure changes and promotional changes, while artificial intelligence adoption helped drive $3 million in extra savings.

New chief executive Susie Sudgen said there was more to be gained as the retailer leveraged artificial intelligence.

"Our retail reporting and data are the best I've ever seen, and we've already developed AI agents to access data and analyse it in natural language," she said.

"The next stage for us is to prioritise more customer-facing innovation, building on our industry-leading data to personalise their experience and improve conversion rates."

Investors were unforgiving, sending Temple & Webster shares more than 18 per cent lower to a more than three-year low of $4.13 by midday.

"This is a business with a huge growth opportunity ahead of it and a really consistent track record of execution against that opportunity," she told analysts.

The new boss, who rejoined the company after a six-year stint in private equity, took the reins from Mr Coulter in July after he shifted to executive chair.

With a total addressable market of $40 billion between furniture and homewares, home improvement, and New Zealand, Ms Sudgen is targeting double-digit revenue growth in the coming months.