Online furniture and homewares retailer Temple & Webster (T&W) says it is on track to return to profit by calendar 2018 after significantly shrinking its first-half loss.

The company suffered a $5.38 million loss in the six months to December 31, almost 70 per cent lower than the $17.2 million loss it made in the same period a year ago.

T&W’s focus on furniture, which is more profitable than homewares, helped drive revenue up 60.2 per cent to $34 million during the half.

The group, which listed on the share market in December 2015, had a rocky 2015/16 after spending big on advertising which partly dragged the group to a pro-forma annual loss of $44.4 million that year.

Co-founding and acting chief executive Mark Coulter says 2015/16 was a challenging year but the group’s turnaround strategy is now in “full swing”.

“This half we made the strategic decision to focus on furniture; improving our range of living room, dining room, bedroom and office furniture,” he said.

“Furniture represents the lion share of our market and has higher margins because of the unbranded nature of the product and is generally less competitive (online).

“You have more flexibility with your pricing with unbranded products.”

Furniture accounts for more than 50 per cent of the group’s sales now and makes up the lion’s share of the $12.6 billion furniture and homewares market in Australia.

“Given our first-half revenue of $34 million, we are well on our way to reach profitability by calender 2018,” Coulter said.

He said Australia’s strong housing market and the growth in online shopping bode well for the business.

A reduced and smarter marketing and advertising spend, less discounting, and reductions in operating and shipping costs had all helped drive up T&W’s profit margins, he added.

Coulter said the group’s positive momentum continued in January with revenue, gross profit and underlying earnings showing similar year-on-year growth rates as recorded in the first half.

During the first half, the group completed the integration of online furniture retailer Milan Direct, which it acquired in December 2015, into T&W.

T&W’s share price was flat at 15 cents at 1130 AEDT.

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