The Temple & Webster Group Ltd (ASX: TPW) share price is under the spotlight after the company announced a FY26 update.
Temple & Webster is an online retailer of homewares, furniture and home improvement products.
FY26 trading update
The company announced that since its last trading update, consumer confidence has reached historic lows.
In response to this, Temple & Webster has rebalanced profit and growth in the short-term after successfully implementing a margin optimisation program.
After this change, the business saw April EBITDA (EBITDA explained) rise to $2.5 million, the most profitable April in the company’s history.
The company noted that it has implemented a new promotional “cadence” (frequency), repriced the entire catalogue, obtained more support from suppliers, restructured its marketing campaigns and slowed its fixed cost growth.
FY26 revenue is expected to grow between 11% to 12%, year on year, to between $665 million to $675 million. Meanwhile, EBITDA is expected to grow between 6% to 17% to between $20 million to $22 million. The step-up in profitability is from the FY26 fourth quarter.
Temple & Webster suggested that the current margin run-rate would mean FY27 EBITDA would almost double to around $40 million, even in a low growth scenario.
The company believes the uplift in profitability, combined with its strong balance sheet, positions the business well for organic and acquisition growth, as well as “broader capital management initiatives”.
Management comments
The Temple & Webster CEO Mark Coulter said:
We remain firmly focused on growing our market share and reaching $1 billion in revenue by FY28, and becoming a larger, more profitable business. However right now, given the uncertainty in the Australian economy, we have prudently chosen to rebalance between profit and growth in our core business.
A more profitable core business allows us to keep investing in our consumer offering and platform – including a larger and more diversified private label and exclusive business, better and faster delivery options, and personalisation across all our customer touchpoints. It also allows us to take advantage of a more attractive M&A environment, particularly in our emerging growth areas such as home improvement, B2B and international, which all continue to perform well.
Final thoughts on the Temple & Webster share price
The business is doing what it thinks is the right thing for shareholders. It’s interesting how much it has changed its strategy since the first half of FY26 when it seemed willing to lower margins to drive market share gains.
Focusing on market share gains is a fine strategy, while wanting to grow profit is also compelling. It’s understandable that it wants to be profitable during this period of higher interest rates. It may see stronger earnings on its cash balance during this period, too.
It’ll be interesting to see what the market makes of this. Will slower revenue growth worry investors or will they cheer a focus on profit? Time will tell.
As a shareholder, I’m interested to see what acquisitions the company may (attempt to) make. That could help its long-term scale and returns. I think it’s worth buying after this update, though the next year or two could be volatile.
