Temple & Webster Group Ltd (ASX: TPW) shares are under pressure again on Wednesday.
In morning trade, the ASX 300 stock sank 15% to a 52-week low of $4.54 before recovering slightly.
At the time of writing, the online furniture retailer's shares are down 6% to $5.01.
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Why is this ASX 300 stock sinking?
Investors have been selling Temple & Webster's shares following the release of an update on its guidance for FY 2026.
According to the release, since its last trading update, consumer confidence has reached historic lows.
In response, the ASX 300 stock has rebalanced profit and growth in the short-term, successfully implementing a margin optimisation program.
It notes that following this, its EBITDA in April increased to ~$2.5 million. This is the most profitable April in the company's history.
As a result of this rebalance, Temple & Webster's FY 2026 revenue is expected to be in the range of $665 million to $675 million. This will be an increase of 11% to 12% on the prior corresponding period.
The company's EBITDA is expected to be in the range of $20 million to $22 million. This will be an increase of 6% to 17% over the prior corresponding period.
Management also highlights that the current margin run-rates would lead to EBITDA almost doubling to ~$40 million in FY 2027, even in a low growth scenario.
It believes this significant uplift in profitability, combined with a strong balance sheet, positions the ASX 300 stock well for both organic and inorganic growth, and broader capital management initiatives.
However, judging from its share price performance today, the market isn't as convinced.
Commenting on the change, Temple & Webster's outgoing founder and CEO, Mark Coulter, said:
We remain firmly focused on growing our market share and reaching $1 billion in revenue by FY28, and becoming a larger, more profitable business. However right now, given the uncertainty in the Australian economy, we have prudently chosen to rebalance between profit and growth in our core business. Over the last two months, we have implemented a new promotional cadence, repriced the entire catalogue, obtained more support from our suppliers, restructured our marketing campaigns, and slowed our fixed cost growth.
These initiatives have led to a new profit record for the month of April by quite a long way, and a clear path to a doubling of EBITDA in FY27 to ~$40 million, despite the economic headwinds. This shows the incredible agility of our business model and the speed of which we can adjust our levers in response to external changes.
Coulter then concludes:
A more profitable core business allows us to keep investing in our consumer offering and platform – including a larger and more diversified private label and exclusive business, better and faster delivery options, and personalisation across all our customer touchpoints. It also allows us to take advantage of a more attractive M&A environment, particularly in our emerging growth areas such as home improvement, B2B and international, which all continue to perform well.
