Online furniture and homewares seller Temple & Webster [ASX:TPW] addressed investors at its annual general meeting earlier this morning, revealing sales had fallen 14% in the last quarter.
TPW’s EBITDA margin will remain within a 3–5% range across FY23.
The online seller surged 8% by mid-morning, even as it’s been falling between 11–53% during the year:
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An update on trade for Temple & Webster
The homewares distributor flagged ‘the toughest period for year-on-year comparisons’ with consideration of COVID lockdowns impacting sales, with many of these limitations continuing through FY22 with additional macro challenges entering FY23.
It was also for this reason the company decided to evaluate its metrics across the last two years, aiming for a more evened approach.
The company argued a positive trajectory towards growth, even as the second quarter was down 3% on the same period last year.
There was an overall decline in revenue of 14% for the period 1 July to 27 November 2022, and yet November was said to be the busiest month for TPW sales, with the annual event Black Friday.
Temple said that it’s focused on achieving bottom-line profitability over year-on-year growth and has reinstated its existing 3–5% EBITDA range for the remainder of FY23.
By year-end 2022, revenue was $426.3 million, a 55% increase on a two-year compound annual growth rate basis, and EBITDA was up 38% on the same basis to $16.2 million.
‘The great part of this result was that it was driven by both a 21% year-on-year increase in the number of active customers, and a 6% increase in revenue per active customer,’ commented TPW’s CEO, Mark Coulter.
‘Not only are we getting bigger, our customers are spending more with us as we do so.’
‘Our EBITDA for the year was 3.8%. Importantly this result included an investment of $1.7 million in the Group’s new Home Improvement site — known as The Build by Temple & Webster.’
The furniture seller’s cash balance remains more than $100 million, which the company believes will support initiatives, revenue growth, and earnings per share.
Temple is currently undergoing recruiting processes for two new directors, having farewelled its Non-Executive Director and Chair of the audit and risk committee Sue Thomas, and Non-Executive Director, Conrad You, who has moved into the role of Deputy Chair.
Source: TPW
Outlook for TPW
The online homewares merchandiser said that its balance sheet should allow for future growth opportunities and offer some flexibility, accelerating opportunities while it considers capital management strategies where appropriate.
It also believes it has the funds to work its way through potentially challenging macro conditions that may arise.
Temple says its Australian addressable market is now valued at more than $30 billion and argues market dynamics in Australia represent favourable margin profile and competition over American markets, hinting at local opportunities ahead.
The company intends to invest further in home improvement, B2B, expanding labels ,and leveraging analytic capabilities.
‘As we head towards the second half of FY23, we understand that there could be turbulent times ahead for Australia, due to prevailing economic conditions,’ CEO Mark Coulter said.
‘Fortunately, we have several factors on our side to help combat potential volatility. The most important of these is the financial strength of our business. We have a strong balance sheet and we are profitable, which will safeguard against any negative downturn in the macro environment.’
Coulter also claimed a flexible business model and leading customer value will assist the business in navigating the current economic climate.
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Regards,
Mahlia Stewart
For The Daily Reckoning
