The Temple & Webster Group Ltd (ASX: TPW) share price is rising after the ASX retail share reported a very strong HY24 result.
Temple & Webster sells a huge range of furniture and homewares through its website.
FY24 half-year result
Here are some of the highlights from the six months to 31 December 2023:
- Revenue jumped 23% to $254 million
- EBITDA of $7.5 million
- EBITDA margin of 2.9%, at the top end of its guidance of 1% to 3%
- Reached more than 1 million active customers in February 2024
- Closing cash of $114 million, no debt
The company saw strong revenue growth despite “some of the toughest headwinds” to its category the company has seen.
Its revenue was driven by both first-time and repeat customers. Second quarter revenue rose 40% thanks to strong sales in the Black Friday to Cyber Monday period. The company is taking market share in a sector that is down around 6%.
The trade and commercial division saw 23% revenue growth to $23 million, equating to 9% of revenue. Home improvement saw 18% revenue growth to $14 million, which was a 6% contribution.
Temple & Webster revealed that it is adding hundreds of private label products to its website. It’s also increasing the amount of exclusive products to Temple & Webster from its own private label and exclusive drop-shipped products.
Temple & Webster achieved $7.5 million of EBITDA despite the costs of investing more in brand investment and marketing.
Is there a good outlook for the Temple & Webster share price?
Its goal is to achieve a ‘scale point’ as quickly as possible, while staying profitable. The company is still growing very quickly.
Temple & Webster revealed the second half of FY24 has “started strongly”, with revenue up 35% year on year for between 1 January to 11 February.
It is working hard to reach $1 billion of annual sales, which it thinks will give it a strategic moat around its range, brand awareness, data and AI capabilities, fixed costs as a percentage of revenue, and potentially new growth plays.
The company still has a long-term goal of becoming Australia’s largest retailer of furniture and homewares.
The Temple & Webster share price has risen a lot over the last few months, so I wouldn’t call it a buy right now. In the long-term I think it can reach its goals, but there could be some (volatility) bumps along the road and that could offer up a better price to buy.
While it’s difficult to be patient, I think it makes sense waiting with this one. There are other ASX growth shares that could be better buys today.
