Online homeware and furniture retailer Temple & Webster is bleeding as much as $800,000 a month as its newly appointed chief Mark Coulter considers how the homeware brand could translate into a physical store network in the future.
Mr Coulter, who co-founded the online retailer with Adam McWhinney and former chief Brian Shanahan, said the monthly burn was decreasing every month and the operation remained committed to hitting break-even in calendar 2018, as set out in the float prospectus.
It has already reduced monthly losses by about $400,000 a month from a high of about $1.3 million as a result of savings in payroll, logistics, general operating costs and the marketing spend.
Mr Coulter admitted mistakes were made, including an investment in outdoor and offline advertising and a marketing team led by Mr Shanahan, who was busy running the company as well as working on the IPO.
However, he denied the $20 million acquisition of Milan Direct and the purchase of the Australian arm of US business Wayfair International for $6 million in 2015 were to blame or that the business was floated too early.
"Potentially, we were trying to grow and try new things too quickly ... I think also in terms of integration things do take longer and it's not that the acquisition thesis was wrong, to build the only player of scale, but we probably underestimated how long it would take to do the integration," Mr Coulter said.
"If we had been able to find a big pot of money out there to allow us to make the acquisitions, form the No.1 online retailer group in our category and have a lot of capital to grow and own the category, we would have taken that pot of money.
"Australia doesn't have that kind of venture-capital community ... and definitely not for our category, we tried but the public markets were a way to fund the vision."
Temple & Webster is already selling homewares through a Milan Direct "pop-up" store in Melbourne and it plans to open a similar showroom in Sydney.
Mr Coulter said there was definitely demand for physical stores, especially for larger purchases, but he said the bottom line was the brand needed to be where the customers were.
"I also think the Temple & Webster brand has the potential to change the way people shop offline as well as online," he said.
However, he said there were no plans to build a big-store network in the near term or even medium term.
Retail analyst Brian Walker said Temple & Webster would need to substantially expand its bricks-and-mortar network to capture a profitable share of the $12.6 billion homewares and furniture market.
"If you look at the difficulty pure-play online retailers are having ... you come to the conclusion perhaps the heat has come out of pure-play retail," Mr Walker said.
"If you look at businesses like homewares, it's very about the in-store experience, it's a very tactile experience."
Since listing at $1.10 in December 2015, Temple & Webster's share price has plunged as low as 12¢, falling off a cliff following the release of its half-year loss and the warning that its full-year earnings loss would sink as deep as $14 million, substantially more than the $8.5 million pro-forma loss forecast.
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