Temple & Webster climbs on better-than-expected sales
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More news: Shares in Temple & Webster climbed more than 10% to $15.72 in early trading after the online furniture retailer delivered bumper sales for the first half, topping market expectations.
The company more than doubled its first-half profit, with earnings margin comfortably ahead of guidance.
RBC Capital Markets analyst Wei-Weng Chen called the result as "strong" as revenue was 2.4% ahead of RBC estimates and EBITDA margins were "well above" the top end of guidance. RBC has an 'outperform' rating on the stock with a price target of $16.
"The main negative from today is TPW's early 2H25 trading update. But our primary takeaway from the result is that, in 1H25, TPW managed to deliver on BOTH growth and margin — the bear thesis being that these two are mutually exclusive," Chen said.
Citi analysts were also positive on the result as adjusted EBITDA was 47% ahead of expectations due to gross profit margin expansion and better cost outcome. Citi has a 'buy' rating on the stock with a price target of $13.50.
"The EBITDA margin beat was notable given TPW was able to meet top-line growth expectations, indicating that the company can hold growth sustainably while pursuing a lift in margins," Citi said.
What they said: UBS analysts said: "Business continues to generate material free cash flow which will support buyback in place. Other operating metrics largely positive with Revenue per customer and Average Order Value rising and conversion rate exceeding 3%".
Temple & Webster doubles HY profit on improved revenue, margin
The news: Temple & Webster more than doubled its first-half profit after the furniture retailer's EBITDA margin comfortably topped guidance for the full financial year.
The numbers: Temple & Webster reported underlying first-half net profit after tax of $9 million, a 117.9% rise on the prior corresponding period, and 76.5% ahead of consensus estimates, according to Visible Alpha data.
Revenue of $313.7 million was a 23.6% improvement year on year, beating average market forecasts of $310.2 million.
Temple & Webster's first-half EBITDA margin of 4.2% was well above to the top end of its full-year guidance range of 1% to 3%.
The company said revenue growth has continued into the second half of the year, climbing 16% year on year for the period between 1 January and 10 February, despite cost-of-living challenges.
However, Citi and RBC Capital Markets analysts noted that growth during this period was below consensus expectations of 23%.
The context: RBC Capital Markets analyst Wei-Weng Chen called the result "very strong". He said that despite slower-than-expected growth at the start of the second half, Temple & Webster expects this to accelerate due to easier comparison growth rates later in the period. The company also said it can utilise the margin flexibility to built over the first half of the financial year.
What they said: "The main negative from today is [Temple & Webster's] early 2H25 trading update," said Chen.
"But our primary takeaway from the result is that, in 1H25, [Temple & Webster] managed to deliver on BOTH growth and margin — the bear thesis being that these two are mutually exclusive.
The source: ASX announcement
