WoodenStreet: Consistent Growth and Profitability in Omnichannel Furniture

The company has achieved over 50% year-on-year sales growth for several consecutive years, even as it scaled its operations significantly.

Strong Revenue Growth and Profitability

Founded in 2015, WoodenStreet offers a comprehensive range of homeware products, including solid wood and modular furniture, kitchen and wardrobe solutions, home decor items, lighting, and furnishings. They currently operate over 90 physical stores and provide access to more than 30,000 furnishing products.

Financial statements filed with the Registrar of Companies for the fiscal year ending March 2023 (FY23) reveal strong revenue growth. WoodenStreet’s operating revenue surged by 48.1% to Rs 194 crore, compared to Rs 131 crore in the previous year (FY22). This growth was primarily driven by furniture, furnishing, and decor sales. The company also generated Rs 3.54 crore from interest on deposits and investments, bringing total revenue to Rs 198 crore in FY23.

Despite the rapid expansion, WoodenStreet has maintained profitability for the past four years. This achievement can be attributed to a combination of consistent sales growth and a well-managed cost structure. While the cost of procuring furniture, furnishings, and decor items constitutes the largest expense category (accounting for 62.7% of total expenditure in FY23), it has grown proportionately with revenue (46.4% increase to Rs 123 crore). Other operational expenses, including employee benefits, rent, marketing, and administrative costs, also rose by 50.8% to Rs 196 crore in FY23 (compared to Rs 130 crore in FY22).

Financial Strength and Future Challenges

WoodenStreet’s consistent growth and controlled cost management have resulted in positive Return on Capital Employed (ROCE) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margins. The company reported an ROCE of 1% and an EBITDA margin of 3.4% in FY23. Additionally, their unit economics demonstrate efficient operations – for every rupee earned, WoodenStreet spent only Rs 1.01 in FY23.

The company has successfully raised $34 million in funding, including a $30 million Series B round led by WestBridge. Startup data platform TheKredible reveals that Indian Angel Network (IAN) is the largest external stakeholder with an 11.76% stake, followed by Rajasthan Venture Capital Fund and WestBridge. As of March 2023, WoodenStreet held current assets of Rs 126 crore, including cash and bank balances of Rs 45.2 crore. Financial analysis suggests a healthy enterprise value to revenue multiple of 6X, which compares favorably with other VC-backed consumer internet businesses.

While WoodenStreet has established a strong track record, future challenges remain. The furniture industry presents difficulties in areas like sourcing, design, inventory management, and product degradation. The company’s success in navigating these challenges has earned them industry respect.

Looking ahead, the key challenge for WoodenStreet will be achieving significant revenue growth (beyond Rs 500 crore) while maintaining profitability. Currently, their sales are concentrated in the National Capital Region (NCR), highlighting limitations of the online model. Expanding their reach will likely require additional warehouses and potentially higher logistics costs. This strategy must be balanced with maintaining a competitive edge against potential future entrants like Ikea, which plans a pan-India presence by 2026.