Online furniture and homewares retailer Temple & Webster Group (ASX: TPW) has defied weak consumer sentiment to post a solid earnings performance over the first half of FY25 driven by new and repeat customers making higher value purchases than a year earlier.
Temple & Webster has more than doubled its net profit after tax to $9 million as revenue surged 24 per cent to $314 million for the six months to the end of December.
The news initially sent shares in the online retailer 17.5 per cent higher to $16.78, although by late morning the gains were pared back significantly. The company’s stock was trading at $15.50 per share by 11.22am (AEDT) – up 8.5 per cent on yesterday’s close.
Temple & Webster’s bottom line was boosted by a significant gain in its EBITDA margin to 4.2 per cent, which was well above the FY25 guidance range of between 1 and 3 per cent.
The company says that it is now the largest online retailer in the homewares category, with market share increasing from 10 per cent to 15 per cent. The online retailer also reveals that it has achieved a record high of 2.9 per cent of the total Australian furniture and homewares market.
“Temple & Webster has again delivered a record half, with strong performance against all key metrics, against a challenging macro and consumer backdrop,” says CEO Mark Coulter.
“We continue to deliver on our mission of providing beautiful items for the home at great value, as reflected in our strong revenue, active customer and market share growth.”
In supporting its mid-term mission of achieving $1 billion in annual sales, or double the $498 million it achieved in FY24, Temple & Webster notes that the Australian online market for its category has grown from 18 per cent penetration in FY23 to 28 per cent.
The company adds that millennials have become the “largest spending cohort in the category” which is in line with the US and UK at 27 and 28 per cent respectively.
Although coming from a low base, home improvement sales were significantly up on the previous year, contributing about $20 million to group revenue – an increase of 41 per cent year-on-year.
Margin growth was supported by an increase in contribution from exclusive products during the period, which accounted for about 45 per cent of total revenue during the first half – up from about 37 per cent a year earlier. The company says this includes growth in both private label and exclusive drop-ship products.
“Higher penetration of exclusive products drives differentiation in our customer proposition, and increases the defensibility of our model over time,” says the company.
Temple & Webster finished the first half with a cash balance of $139 million, up from $107.2m on 30 June 2024.
With no debt, the company says its business remains “well-capitalised and fully funded to continue executing on its growth plans”.
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