The Temple & Webster Group Ltd (ASX: TPW) share price has soared around 29% after revealing its FY22 report.
Temple & Webster is a leading e-commerce ASX share that sells homewares, furniture and many other types of items for the home and garden.
Temple & Webster FY22 result highlights
Here are some of the main numbers from the report:
- Revenue rose 31% to $426.3 million
- EBITDA (EBITDA explained) margin of 3.8%, at the high end of the 2% to 4% target range
- Net profit before tax of $13.2 million
- Active customers grew 21% to 940,000
- Revenue per active customer increased 6%, the 8th consecutive quarter of growth
Within the revenue, its ‘growth horizon’ segments demonstrated good growth. ‘Trade and commercial’ revenue rose 39% despite “challenging market conditions”.
The home improvement division saw revenue growth of 61%, with ‘The Build’ performing strongly in its first few months of operating. This is another website where the company is selling home improvement products.
Stronger EBITDA margin expected
Temple & Webster said that given FY23 cyclical headwinds, it has accelerated some of its ‘margin optimisation and cost management programs’. In light of that, it has upgraded its EBITDA margin guidance for FY23 from a range of 2% to 4% to a range of 3% to 5%.
This profitability range is after its investment into The Build, which “demonstrates the increasing operating leverage of the core business.”
FY23 guidance and commentary
Temple & Webster said it was entering FY23 with strong inventory levels on all metrics, which are in line or better than internal targets.
Due to the timing of lockdowns during FY22, it may be difficult for the business to deliver growth in the first half of FY23.
July trading saw revenue down 21% year on year. In August trading to the 14th, trading was down by 17% year on year. However, this was ahead of internal estimates.
Management said that month to month seasonality suggests a “return to double digit growth during FY23” once it is no longer comparing against a time period that included lockdowns in the previous year.
Final thoughts
Temple & Webster made comments suggesting that the business has a promising future, and can perform through this period:
We believe our flexible business model, our proposition around a great quality range at affordable prices, and our commitment to customer satisfaction and happiness will resonate even more strongly with customers during these tougher times.
We remain committed to our profitable growth strategy. We’re confident we have the people, platforms, brand and business model to achieve our goal of becoming Australia’s largest retailer of furniture and homewares.
The Temple & Webster share price has soared in recent weeks as it bounced back from recent lows. It’s still down around 47% over 2022. I do think it’s a long-term opportunity at the current level, but there could be plenty of volatility ahead. Better margins would be attractive. It is one of the ASX growth shares on my watchlist.
