The Temple & Webster Group Ltd (ASX: TPW) share price has jumped 15% after the business revealed an astonishing FY24 trading update.
It’s an online-only furniture and homewares selling hundreds of thousands of products.
Very strong start to FY24
The company reported FY24 has started “strongly” with sales from 1 July 2023 to 27 November 2023 up 23% year on year. That came after a good finish to FY23.
The second quarter of FY24 has seen an acceleration of growth with revenue up 42% year on year. That’s for the period of 1 October to 27 November, which has partly been supported by the launch of the ‘above-the-line’ brand campaign in Sydney, Melbourne and Brisbane, which started on 22 October.
Temple & Webster revealed that the Black Friday to Cyber Monday trading period continues to grow in importance as customers bring forward their Christmas shopping. This year, the 4-day period saw $17.4 million of sales, up 101% year on year, with “multiple record days”. The Temple & Webster share price could be increasingly impacted by this period in the coming years.
The company boasted it has continued to grow its market share at a time when the overall furniture and homewares market is “down”, which reflected the “resilience” of the business model and the “flexibility” of its merchandising strategy.
Temple & Webster stated growing its market share is a key strategic focus, which supports its goal of becoming “Australia’s largest retailer of furniture and homewares”.
Balance sheet and profitability
The retailer revealed that its $30 million share buyback has bought back 3.9 million shares at a total cost of $19.9 million to date. It still has a cash balance of more than $100 million which “provides significant flexibility to accelerate both organic growth and potentially inorganic opportunities.”
Temple & Webster also reaffirmed its EBITDA (EBITDA explained) margin guidance for FY24. It’s expecting its FY24 to FY25 EBITDA margin to be between 1% to 3% after a huge investment in marketing, though the ‘business as usual’ EBITDA margin is expected to be between 3% to 6%.
Temple & Webster share price outlook
If the company keeps growing its revenue at a rate of more than 10% per year for many years in a row, it will likely be successful in its goals of $1 billion sales and ultimately becoming a very large player in the homewares and furniture space.
I think it’s one of the best retailers in Australia, which is why I recently invested at a substantially lower price than right now. The next time it suffers a 30% sell-off, I may decide to dive back in and buy a few more shares.
