The UK branch of Chinese online marketplace Temu saw its revenue and pre-tax profits double last year, as UK shoppers increasingly turned to products from ultra-budget retailers.
Temu UK’s revenue reached $63.3 million (£46.4 million) last year, nearly doubling the $32 million from 2023, with pre-tax profits climbing from $2 million to $3.9 million.
Nonetheless, on the operating front, the company—registered as Whaleco UK with Companies House—reported an increase in losses from $7.9 million to $8.7 million compared to the prior year. The majority of its operating loss was attributed to “exchange losses.”
Given Temu’s modest pre-tax profit, the company contributed just $985,000 in UK corporate tax, a rise from $517,000 in 2023.
Similar to Amazon UK and Google UK, Temu’s UK operations report revenues as “service fees,” indicating that it generates revenue “through the provision of corporate support services to affiliated entities.”
While Temu experiences rapid growth in the UK, the company, alongside others like cheap fast-fashion rivals and e-commerce giant Amazon, may have to raise prices following the government’s review of tax regulations in April, which would allow small parcels to qualify for UK tax exemptions.
Current laws permit international retailers to ship parcels to the UK valued under £135 without incurring import taxes. UK retailers argue that these regulations provide unfair advantages to businesses like Temu and Shein.
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Earlier this year, Theo Paphitis indicated that retail groups—including Ryman and Robert Dyas—were contravening the measure, suggesting that the retail group would encompass Ryman and Robert Dyas.
As of August 29th, the US has already initiated steps to remove the “minimum” exemption for parcels valued under $800.
On Wednesday, the head of luxury retailer Fortnum & Mason stated that this situation would significantly elevate the costs of goods, such as high-end teas, purchased by US consumers.
In July, European Union Attorney General Michael McGrath expressed dismay at the hazardous nature of some products offered by companies like Shein and Temu.
With 12 million low-value parcels being shipped daily within the EU from online retailers outside the bloc, McGrath has committed to tightening restrictions on the sale of products that blatantly violate the law.
The EU is also contemplating the elimination of the €150 (£130) tax-free threshold and the introduction of handling fees for each parcel.
Source: www.theguardian.com
