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Leading online Australian furniture retailer Temple & Webster (ASX:TPW) have released first half results this morning centred around the company’s successful implementation of cost management and margin improvement programs in the second quarter.

For the half, the company reported revenues from ordinary activities down 12% to $207 million, and profit from ordinary activities after tax down 46.7% to $3.87 million from the prior corresponding period. NPAT beat both Bell Potter and Consensus expectations by a significant amount. For the second quarter, the company reported EBITDA up 11.8% on Q2 FY22 on the back of the cost cutting program implementation.

Retail companies are also measured by their level of inventory, which for Temple and Webster came in at $25.7m at the end of the second half, which is relatively high given the company also said 72% of sales have no inventory risk due to drop-shipping, the inventory balance is relatively high. Comparing this to H1 in FY22, the company’s drop-shipping sales have declined from 74% in H1 FY22 to 72% in H1 FY23, and inventory on hand has increased from just over $20m to $25.7 million over the year.

On the plus side, TPW had a closing cash balance of $102.4 million at the end of the half with no debt, indicating it is well funded to weather future headwinds.

The first 5 weeks of the second half of FY23 have seen sales drop 7% on the prior corresponding period which the company said was a significantly strong period in H2 FY22 due to the elevated demand during the Omicron outbreak.

The company has also failed to provide any quantitative outlook, instead saying it remains committed to its ‘profitable growth strategy and will continue our focus on margin optimisation and cost management to ensure it ends the year within our 3-5% EBITDA range.’

Investors have responded negatively to the results, with TPW shares currently trading almost 17% lower in the first few hours of trade on Tuesday.