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Temple & Webster (ASX:TPW) share price rises after strong HY24 result

The Temple & Webster Group Ltd (ASX: TPW) share price is rising after the ASX retail share reported a very strong HY24 result.

Temple & Webster sells a huge range of furniture and homewares through its website.

FY24 half-year result

Here are some of the highlights from the six months to 31 December 2023:

  • Revenue jumped 23% to $254 million
  • EBITDA of $7.5 million
  • EBITDA margin of 2.9%, at the top end of its guidance of 1% to 3%
  • Reached more than 1 million active customers in February 2024
  • Closing cash of $114 million, no debt

The company saw strong revenue growth despite “some of the toughest headwinds” to its category the company has seen.

Its revenue was driven by both first-time and repeat customers. Second quarter revenue rose 40% thanks to strong sales in the Black Friday to Cyber Monday period. The company is taking market share in a sector that is down around 6%.

The trade and commercial division saw 23% revenue growth to $23 million, equating to 9% of revenue. Home improvement saw 18% revenue growth to $14 million, which was a 6% contribution.

Temple & Webster revealed that it is adding hundreds of private label products to its website. It’s also increasing the amount of exclusive products to Temple & Webster from its own private label and exclusive drop-shipped products.

Temple & Webster achieved $7.5 million of EBITDA despite the costs of investing more in brand investment and marketing.

Is there a good outlook for the Temple & Webster share price?

Its goal is to achieve a ‘scale point’ as quickly as possible, while staying profitable. The company is still growing very quickly.

Temple & Webster revealed the second half of FY24 has “started strongly”, with revenue up 35% year on year for between 1 January to 11 February.

It is working hard to reach $1 billion of annual sales, which it thinks will give it a strategic moat around its range, brand awareness, data and AI capabilities, fixed costs as a percentage of revenue, and potentially new growth plays.

The company still has a long-term goal of becoming Australia’s largest retailer of furniture and homewares.

The Temple & Webster share price has risen a lot over the last few months, so I wouldn’t call it a buy right now. In the long-term I think it can reach its goals, but there could be some (volatility) bumps along the road and that could offer up a better price to buy.

While it’s difficult to be patient, I think it makes sense waiting with this one. There are other ASX growth shares that could be better buys today.

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At the time of publishing, Jaz owns shares of Temple & Webster.
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