The Temple & Webster Group Ltd (ASX: TPW) share price is under the spotlight this morning after announcing a $30 million share buyback.
As a reminder, Temple & Webster is an online retailer of furniture and homewares. It sells over 200,000 products from hundreds of suppliers, which reduces the need to hold inventory and allows for a larger product range. The ASX share also has a private label range.
Share buyback
The online retailer announced to the ASX market today that it intends to initiate an on-market share buyback of up to a maximum of $30 million, starting in early April 2023 for a period of up to 12 months.
Temple & Webster’s board said that buying back shares at the current price is “effective capital management while retaining financial flexibility to fund accretive organic and inorganic opportunities as part of its growth strategy.” In other words, it has enough money to boost investor confidence and fund growth, and potentially acquisitions.
The buyback will be limited to 10% of issued capital over the 12-month period, which is what the law allows without shareholder approval.
Temple & Webster said that it will tell the market about the number of shares bought and the average price paid on the business day following the date that those shares were bought.
The shares will be cancelled after they are bought, so the number of shares will reduce.
Temple & Webster noted that it will continue to assess market conditions, its prevailing share price, available investment opportunities and all other relevant considerations throughout this share buyback period.
What to make of this for the Temple & Webster share price
It’s clearly a positive in investor minds. Despite the ASX 200 (ASX: XJO) being down close to 2%, the Temple & Webster share price is up more than 3%.
In an article literally published this morning, I called Temple & Webster shares a buy because they looked good value to me because of the long-term potential and how much more profitable it could become as it grows and more people shop online.
I still think it’s one of the ASX growth shares I’d want to own at this price, though there are others amid a fair bit of pain in the market at the moment.
