Cha-ching! Temple & Webster (ASX:TPW) share price soars 12% on record half revenues

The Aussie homewares retailer is having a good day on the market…

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Key points

  • The Temple & Webster share price is rocketing 12% today
  • The company's revenues were almost 46% higher for the half ending 31 December 2021
  • The retailer has not paid, declared, or indicated a dividend for the period

The Temple & Webster Group Ltd (ASX: TPW) share price is rocketing today.

The gains come amid the Aussie homewares retailer releasing its earnings results for the half-year ending 31 December 2021.

The company's revenue figure shows its business has more than tripled in a two year period.

At the time of writing, the Temple & Webster share price is up 12.17% at $9.03 after hitting a high of $9.37 earlier this morning.

So what exactly did the company achieve in the recent half? Let's take a closer look…

Temple & Webster corporate results

At a glance, the retailer's results for the half-year ending 31 December were as follows:

  • Revenues (from ordinary activities) up almost 46% to $235 million
  • Earnings before interest, taxes, depreciation and amortisation (EBITDA) at 5.1% — higher than its full-year target of 2-4%
  • No debt and a closing cash balance of $105 million
  • Net profit (before tax) was down 26.8% to $10.6 million (against its prior corresponding period [PCP])
  • Conversely, profits (from ordinary activities after tax attributable to owners) was down 40% to $7.2 million

The results come just a week after Goldman Sachs tipped the company might deliver disappointing half-yearly results, predicting "a lower return on marketing investment vs. market expectations over the near term".

However, no dividends from the retailer were paid, recommended or declared during the current financial period.

Comment from management:

Temple & Webster CEO Mark Coulter said:

Temple & Webster remains one of the fastest growing retailers in the country, delivering record revenue of $235.4m for the half, up 46% on the year before and an incredible 218% on FY20. That means the business has more than tripled in 2 years.

Despite all the challenges that COVID continues to throw at the world, including significant disruptions to global supply chains and domestic logistics, Temple & Webster continues to outgrow the market, while keeping our customers very happy.

What else happened in the last half?

If we look deeper into Temple & Webster's investor presentation for the half ending 31 December, we can see growth in its active customers, growth strategies, and a strong supply chain and inventory.

The retailer reported its brand awareness to be up 61% for the half, pushing its marketing strategy towards "the broader furniture and homewares market". Its trade and commercial businesses also saw substantial growth of 49%.

Temple & Webster's active customers hit 906,000, a 34% increase for the first half of FY22. Further, revenue per active customer increased by 10%, marking its sixth consecutive quarter of growth.

The retailer said this revenue and conversion has been assisted through investment in AI-generated tools, such as 3D imagery to "complete the look" of product recommendations.

In the future, the company aims to have "the largest 3D catalogue of furniture and homewares" in the country.

Looking at the products themselves, the company reported strong inventory valued at $20 million to drive into the next half, with products from a number of both private label and drop ship sources. (Drop shipping is fulfilling orders where the company doesn't store the stock itself.)

"Diversity in our supply chain has allowed us to scale sustainably during COVID periods," the company said.

Further, Temple & Webster is confident that its strong cash position will allow it to focus on "new growth horizons, such as Home Improvement".

The company's investor presentation said:

We remain confident our strategy is resonating with the next generation of shopper and that we are well placed to continue to take share in the markets we are operating in.

We will continue to reinvest operating leverage where it makes sense to do so, building strategic moats around the core business while investing into our new growth horizons.

Temple & Webster share price snapshot

Since 31 December, the Temple & Webster share price had dropped by 25% and by 35% in the last 6 months.

The company saw its share price hit a 52-week low of $7.72 in late January falling from its 12-month high of $14.71 in September.

The retailer has a market capitalisation of around $1 billion at the time of writing and a price-to-earnings ratio (P/E) of 77.07.

Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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