ASX retailer Temple & Webster Group Ltd's (ASX: TPW) share price has risen 11.17% to close at $1.14 on Wednesday following the release of its unaudited result for the half-year ended 31 December 2018 this morning.
Key highlights from this morning's release include:
- Revenue rose 40% year on year to $49.3 million.
- EBITDA of $0.9 million compared to the $0.5 million loss in the prior corresponding period (pcp).
- Active customers grew 32% year on year to 231,000.
- Cash flow positive half of $1.6 million.
- Cash at bank of $11.5 million and no debt
- Contribution margin (margin after all variable costs) rose to 16.5% versus the pcp's 16.1%.
- The percentage of advertising to sales fell from 11.5% in the pcp to 10.9%.
This was a strong half-year result for the company in what has been a challenging operating environment for Australian retailers. Temple & Webster is Australia's leading e-commerce company in the furniture and homewares market and it has managed to grow both its customer base and the amount of revenue per active customer amidst a downturn in Australia's housing market.
Trading update and outlook
Temple & Webster also released a January trading update this morning that revealed it has started 2019 strongly with growth in January exceeding the December half-year period's growth rate of 40%.
Furthermore, the company has announced it will continue to invest in future growth via a number of initiatives. These include launching a mobile app to capitalise on the growth in mobile e-commerce, international expansion in New Zealand, a move into home improvement and further investments into the company's B2B Trade & Commercial division. Management also remains confident that the company will report its first full-year profit in FY19.
Foolish takeaway
With online sales only representing around 4% of the $13.6 billion Australian furniture and homewares market, there is ample room for a company such as Temple & Webster to increase market share. Comparable Western countries such as the United Kingdom and the United States have online sales penetration rates of around 14% in the furniture and homewares market.
The share price of Temple & Webster has now increased by 205% over the last 12 months, comfortably outperforming traditional retailers such as Harvey Norman Holdings Limited (ASX: HVN) and Myer Holdings Ltd (ASX: MYR) who have seen falls of 20% and 40% respectively.
With revenues growing at 40% and a market cap of around $130 million, Temple & Webster is definitely a stock to monitor in the small-cap space.
