It's been a tough year for this ASX retail stock.
Temple & Webster Group (ASX: TPW) has plunged around 60% over the past 12 months. That's a brutal decline — especially when the S&P/ASX 300 Index (ASX: XKO) has gained more than 7% over the same period.
So, what's gone wrong? And could this beaten-down stock really double from here?
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Why the share price has fallen
Several headwinds have hit Temple & Webster.
Macro concerns are front and centre. Rising geopolitical tensions in the Middle East and growing anxiety around AI disruption have weighed on growth stocks broadly.
Then there are cost pressures. Surging shipping costs have raised fears margins could take a hit in the second half of FY26.
Add to that earlier issues — slowing growth, heavy discounting, and increased marketing spend — and it's easy to see why recent earnings disappointed.
Investors have reacted accordingly.
But here's the twist: the long-term story may still be intact.
A scalable growth machine
Temple & Webster is Australia's largest pure-play online furniture and homewares retailer.
Its business model is a key strength. It operates a marketplace platform, connecting suppliers directly with customers. That means it can scale its product range without holding large amounts of inventory.
Less inventory. Lower risk. Greater flexibility.
The company is chasing a big opportunity. The furniture and homewares market remains highly fragmented, and Temple & Webster is targeting more than $1 billion in annual revenue by FY28.
Growth is still strong.
In the first half of FY26, the company delivered nearly 20% sales growth. That's impressive in the current environment.
And the structural tailwind is clear. Online shopping continues to gain share. E-commerce makes up about 20% of Australia's homewares market today. In markets like the UK and US, penetration is closer to — or above — 30%.
There's room to run for the ASX retail stock.
Margins could surge
Profitability is the next piece of the puzzle.
In FY25, Temple & Webster reported an EBITDA margin of 3.1%. That's modest — but it's expected to improve.
Management is guiding for a 3% to 5% margin in FY26. Longer term, it's targeting at least 15%.
That's a huge jump.
If the ASX retail stock can combine higher margins with rising revenue, earnings could scale rapidly. And that's exactly what growth investors want to see.
What do analysts think?
Despite recent setbacks, brokers remain optimistic on the ASX retail stock.
Bell Potter has a buy rating on Temple & Webster, with a $13 price target. That implies around 90% upside over the next 12 months.
More broadly, sentiment is strong. TradingView data shows 10 out of 14 analysts rate the stock a buy or strong buy.
And the most bullish forecast? A price target of $24.00 — suggesting a massive 257% upside.
Foolish takeaway
Temple & Webster has been hit hard. No doubt about it.
But the combination of strong revenue growth, a scalable model, and long-term margin expansion keeps the investment case alive.
If execution improves and macro pressures ease, this dirt-cheap ASX retail stock could be primed for a powerful rebound.
