Shares in Temple & Webster Group Ltd (ASX: TPW) have been absolutely smashed on Thursday.
At the time of writing, the Temple & Webster share price is down a brutal 25.49% to $8.45 following the release of its half-year results.
That leaves the stock down around 40% since the start of 2026, wiping out a huge chunk of its recent gains.
Let's dive into what Temple & Webster actually reported that triggered such a heavy sell-off.
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Revenue jumps 20% as market share grows
Temple & Webster reported H1 FY26 revenue of $376 million, up 20% on the prior corresponding period. Management said growth accelerated through the half, with revenue up 20% year on year from 1 January to 9 February.
Active customers climbed 14% to 1.4 million, while repeat customers now account for 62% of total orders. Revenue from exclusive products increased to 49% of total revenue, up from 45% a year ago.
EBITDA came in at $13.5 million, or $14.9 million excluding New Zealand start-up costs, representing a margin of around 4%.
So why is the share price crashing today?
The issue appears to come down to margins and expectations.
Despite strong top-line growth, delivered margin declined slightly to 30.5%. While marketing costs improved as a percentage of revenue, investors may have been hoping for stronger operating leverage at this stage of the cycle.
Temple & Webster reaffirmed its FY26 EBITDA margin guidance of 3% to 5%. While that range remains unchanged, it suggests profitability will stay relatively modest compared to the company's long-term ambitions.
There was also a sharp decline in net profit before tax, which fell 28% to $7.4 million. Depreciation and amortisation increased materially during the half, impacting the bottom line.
Balance sheet remains strong
Temple & Webster ended the half with $161 million in cash and no debt. The company generated $23 million in free cash flow and continues to run an on-market share buyback.
Management reiterated its medium-term target of reaching $1 billion in annual revenue and said it remains on track.
It is also worth remembering that Temple & Webster has historically traded on a premium earnings multiple. With expectations already running high, even a small miss was enough to spark heavy selling.
Foolish Takeaway
Today's 25% plunge shows just how sensitive high-growth retail stocks can be to any hint of margin pressure.
Temple & Webster is still growing revenue at a healthy rate and building market share. However, with the share price already down around 40% this year, investors are clearly demanding stronger evidence of margin expansion and bottom-line growth.
