The Temple & Webster Group Ltd (ASX: TPW) share price has experienced a remarkable surge, climbing 25% to $11.88 in early trading today, a notable contrast to the largely flat performance of the S&P/ASX 200 Index (ASX: XJO) at 7,810 points.
Strong Growth Amid Challenging Conditions
Temple & Webster's recent FY24 results highlight significant achievements despite a tough market environment. Key figures from the report include:
- Revenue: Up 26% to a record $498 million.
- Active Customers: Increased by 31% to a new high of 1.1 million.
- EBITDA: Declined by 43% to $8.4 million.
- Net Profit After Tax (NPAT): Fell 78% to $1.8 million.
- Closing Cash Balance: $116 million with no debt.
During FY24, the online furniture and homewares retailer expanded its market presence, now holding a 2.4% market share—an increase of 31% from the previous year. CEO Mark Coulter noted that, despite economic pressures, Temple & Webster achieved substantial growth, with revenue rising 26% year-on-year in a market that shrank by 4%.
Operational Highlights and Challenges
The company saw a significant rise in repeat customer orders, now accounting for 57% of all transactions, and new customer orders grew from 491,000 to 654,000. However, revenue per active customer decreased from $477 to $461, and increased costs in advertising, wages, and one-time expenses impacted EBITDA.
In a strategic move, Temple & Webster announced a share buyback program of up to $30 million on May 28. Since then, the share price has declined approximately 5%.
Strategic Outlook
CEO Mark Coulter expressed optimism about the company's mid-term goals, including reaching $1 billion in annual sales and advancing AI capabilities. The development of Generative AI ('Gen AI') tools is expected to drive cost savings and improve conversion rates, contributing to a 30% reduction in customer service costs and merchant fees.
Looking forward to FY25, Temple & Webster reported a 26% increase in revenue for the period from July 1 to August 11. The company has also repurchased about $1.8 million worth of shares since June 17 and appointed Cameron Barnsley as the new chief financial officer.
Over the past year, Temple & Webster's share price has risen by 39.5%, surpassing the 20.6% increase seen across the consumer discretionary sector. Following today's rally, the shares are just 11% shy of their 52-week high.
Temple & Webster's impressive performance and strategic initiatives suggest a strong position in the market, even amidst challenging economic conditions.