Castlery’s FY22 revenue triples, but reports loss due to heavy investments in the US

Castlery, the Singapore-based furniture retailer, reported significant growth in revenue during its 2022 financial year – which covers the 15-month period from January 1, 2021 to March 31, 2022 – according to its parent company GFR Holdings’ financial statements.

The company’s revenue for the period totaled S$147 million (around US$110 million), up 3x compared to FY 2020, which covers the 2020 calendar year. This rate of growth exceeded the rise in its cost of sales, which enabled Castlery to expand its gross profit margin and record a gross profit of US$76 million for FY 2022.

However, the company’s rapid revenue growth was accompanied by ballooning sales and marketing expenses that led it to record a loss for FY 2022. At the group level, Castlery experienced a loss before income tax of US$9 million after being profitable in 2020.

According to Castlery co-founder and president Declan Ee, the losses were due to the group shifting its financial reporting to a March year-end, which led to a 15-month financial period for FY 2022. Previously, the company reported a 12-month period from January to December.

“January to March of each calendar year is seasonally the lowest sales period for the year as well as higher spend as we prep for the year ahead,” Ee tells Tech in Asia.

“This 15-month period captured two of such lower revenue and higher expense periods, hence resulting in higher losses,” he adds, emphasizing that the company’s next financial report would return to a 12-month period from April to March.

Furthermore, the company made investments in FY 2022 to scale globally and make the US its largest market.

Revenue generated from the US stood at US$58 million for the period, a significant increase from US$10 million in 2020. This figure exceeds the revenue it derived from Singapore and Australia combined.

Doubling down on the US

During the 15-month financial period, Castlery focused on doubling down on the US market, which required significant expenses.

The company expanded its market coverage in the country from 10 metropolitan areas, mainly on the East and West Coasts – including Los Angeles, San Francisco, New York, and New Jersey – to nationwide coverage across 52 locations.

“To achieve this, there was forward investment in logistics, marketing, inventory, data analytics, and HR in order to build out the capacity necessary,” Ee explains.

These expenses were the main contributors to the company’s losses in its FY 2022 report: marketing and selling, distribution and supply chain, and employee benefits.

Profitability in sight