Online homewares retailer Temple & Webster has acquired one of Australia’s largest furniture e-tailers, Milan Direct, in a $20 million deal.
Temple & Webster has acquired one of Australia’s largest online furniture retailers, Milan Direct, for a reported $20 million in cash and shares. The deal comes on the back of Temple & Webster’s acquisition of the Australian arm of Wayfair two months ago, and its subsequent rebranding to ZIZO.
Dean Ramler and Ruslan Kogan founded online furniture retailer Milan Direct in 2006. The company has grown strongly since then to become one of the largest online furniture retailers in Australia.
Temple and Webster is a members-only shopping club, and the number one pureplay homewares retailer in Australia, with revenue of $60 million forecast for 2016 and 190,000 active users. The Milan Direct acquisition follows Temple & Webster’s IPO, which closed earlier this month raising just under $62 million for a market capitalisation of $117 million, with shares scheduled for trading on December 10th.
The acquisition is part of the companies’s growth strategy. Temple & Webster co-founder and managing director Brian Shanahan said the acquisition would help the company boost sales and customer numbers and tap changing consumer shopping habits, according to Fairfax Media.
“The three brands (Temple & Webster, ZIZO, and Milan Direct) will allow us to appeal to a wider group of Australians looking for furniture and homewares online and target different types of shoppers—discovery shoppers or intent shoppers,” he said.
Shanahan called the acquisition “very complementary,” pointing out that about 80 percent of Temple & Webster is homewares, and about 80 percent of Milan Direct is furniture.
“There’s a big opportunity for us to extend our leadership position and make Temple & Webster the category winner.”
Despite the growth in sales and website traffic that is expected to follow the acquisition (together with the earlier Wayfair acquisition and subsequent rebranding), Temple & Webster is yet to make a profit. Fairfax reports that directors expect losses to shrink slightly from $11 million before interest and tax in 2015 to $9.5 million this year as it steps up spending on marketing to raise brand awareness.