Online homewares retailer Temple & Webster (ASX:TPW) has bucked the trend of a subdued retail sector, delivering record annual sales and sending its share price skyrocketing. The company’s shares surged by 23.8 per cent by mid afternoon on Tuesday, reaching their highest level since early May.
Temple & Webster’s 2023-24 sales climbed nearly 26 per cent to $498 million, despite a challenging retail environment. However, net profit took a hit, falling to $1.8 million from $8.3 million the previous year due to one-off costs.
Despite the decline in net profit, the company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) exceeded expectations, coming in at $13.1 million.
CEO Mark Coulter attributed the company’s success to its focus on price, range, and convenience, which has resonated with cost-conscious consumers. He also highlighted the company’s strong cash position and its plans to invest in growth initiatives.
Temple & Webster’s strong performance comes on the heels of JB Hi-Fi’s better-than-expected results, raising hopes that the broader retail sector may be showing signs of improvement.
Analysts have praised Temple & Webster’s results, with RBC analyst Wei-Weng Chen noting the company’s significant excess cash. Jarden analysts highlighted the company’s strong start to the new financial year and positive outlook.
Looking ahead, Temple & Webster aims to increase its market share in the $19 billion furniture and homewares market and achieve $1 billion in sales within the next three to five years. The company is also focused on expanding its private label product range and leveraging technology to improve customer experience.
While the company faces challenges in achieving its long-term EBITDA margin target of 15 per cent, its strong performance and growth prospects have investors excited about its future.
