The UK operation of the Chinese online marketplace Temu doubled revenues and pre-tax profits last year, as British consumers snapped up products offered by the super-budget retailer.
Temu UK reported revenues of $63.3m (£46.4m) last year, almost double the $32m in 2023, while pre-tax profits similarly surged from $2m to $3.9m, accounts show.
However, at an operating level, the company, which files under the name Whaleco UK at Companies House, reported losses widening from $7.9m to $8.7m year-on-year. The company put most of its broadening operating loss down to “exchange losses”.
Because of Temu’s small pre-tax profit, the company paid just $985,000 in UK corporation tax, up from $517,000 in 2023.
The company’s UK operation reports its income as a “service fee”, similar to how Amazon UK and Google UK operate, and says it generates revenues “through the provision of corporate support services to its affiliated entities”.
While Temu is experiencing explosive growth in the UK, it – and others such as cheap fast-fashion compatriot Shein and e-commerce company Amazon – potentially face having to implement price rises after the government announced in April a review of a rule that allows small parcels to enter the UK duty-free.
The current rule allows international retailers to send packages to Britain worth less than £135 without incurring import taxes. UK retailers have said this rule gives companies such as Temu and Shein an unfair advantage.
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Earlier this year, Theo Paphitis, the former Dragons’ Den star whose retail group includes Ryman and Robert Dyas, said the measure was devastating UK high streets.
The US has already moved to scrap the “de minimis” exemption for parcels worth less than $800 from 29 August.
On Wednesday, the boss of luxury retailer Fortnum & Mason said this was a factor in having to significantly increase the cost of products such as luxury tea bought by US customers.
In July, Michael McGrath, the European Union justice commissioner, expressed shock at the toxicity and dangers of some goods being sold by Shein and Temu.
With 12m low-value parcels coming into the EU each day from online retailers outside the bloc, McGrath has vowed to crack down on the sale of goods that blatantly break the law.
The EU is also considering the abolition of the €150 (£130) duty-free threshold, and the introduction of a handling fee for each package, which may deter low-value purchases and help pay the cost of extra customs investigations.
