More speed, less haste
1H23 RESULT
Need To Know
- Fewer active customers
- EBITDA margin 3.5% in line with guidance
- Soft trading update, first 5 weeks -7% yoy
World domination will have to wait. Temple & Webster’s foray into the lush and leafy homemaker market, valued at $16bn in Australia, will proceed with more caution for now. Bunnings will be relieved.
Revenue of $207m for the period was down -12% but the prior period was bloated by pandemic sales. TPW ended the half year with cash of $102m and no debt.
TPW wound back its spending during the period in recognition that sales were softening. This has partly buffeted the EBITDA margin which at 3.5% came within the guidance range of 3-5%. TPW reduced its advertising spend by 24% compared to last year.
Meanwhile, TPW’s excitable thrust to enter the large homewares and furniture market with its ‘The Build’ online offering has been brought to a canter. The initial $10m capex spend will be lowered to $6m after the company reported it had been a $2.3m drag on 1H23 earnings.
Revenue per active customer increased by 7% but the active customer base shrank to 840k (it was 940k at 30 June 2022). Repeat customers are just over half of the active customer base.
Sales for the first 5 weeks of 2H23 are down -7% although the prior period had been boosted by the Omicron outbreak.
Even so, TPW has tamed its usual enthusiasm and did not mention a return to double digit growth through FY23f.
Investment View
TPW’s moment of stardom seems to have passed. Now the challenge is to keep implementing its strategy and carefully manage its margins in relation to the rate of investment.
We think The Build was a case of trying to run before you walk, so the decision to take things a little more slowly is probably wise.
TPW’s business model is quite clever in that three-quarters of sales orders are delivered directly to its customers, bypassing the need to worry about inventory holding costs. The model is not unique, but TPW has shown in the past that it can execute it profitably.
In a post-pandemic era with consumers tightening spending budgets, TPW will face a more pedestrian pace of progress.
We are putting our recommendation Under Review.
Stock Overview
Share Price
Company Overview
TPW is an online homewares and furniture retailer.
Disclaimers and Disclosures
Issuer
The information and opinions contained within Sandstone Insights Research were prepared by MST Financial Services Pty Ltd (ABN 54 617 475 180, AFSL 500557) ("MST").
Reliance
Whilst MST make every effort to use reliable, comprehensive information in the construction of its reports, MST make no representation, warranty or undertaking of the accuracy, timeliness or completeness of information in this report. Save for any statutory liability that cannot be excluded, MST and MST employees, representative and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.
General Advice
Any advice contained within Sandstone Insights Research is general advice only and has been prepared without taking into account any person’s objectives, financial situation or needs. Any person, before acting on any advice contained within Sandstone Insights Research, should first consider consulting with a financial adviser to assess whether that advice is appropriate for their objectives, financial situation and needs.
General Disclosures
This report should be read in conjunction with MST Disclaimers and Disclosures and is published in accordance with MST Conflict Management Policy which are available on the MST website: https://www.sandstoneinsights.com.au.
Currency of Research
The recommendations made in a Sandstone Insights Research report are current as of the publication date. If you are reading a report materially after publication, it is likely that circumstances will have changed and at least some aspects of the analysis may no longer hold.
Access and Use
Any access to or use of Sandstone Insights Research is subject to the Terms of Use. By accessing or using Sandstone Insights Research you hereby agree to be bound by our Terms and Conditions and hereby liable for any monies due in payment of accessing this service. In addition you consent to us collecting and using your personal data (including cookies) in accordance with MST Privacy Policy, including for the purpose of a) setting your preferences and b) collecting readership data so MST may deliver an improved and personalised service to you. If you do not agree to MST Terms of Use and/or if you do not wish to consent to MST use of your personal data, please do not access this service.
Equities Research Methodology
Please click here for information about MST equities research methodology.
Related Reports
Playbook has potential
Aristocrat is a catalyst-rich stock with earnings momentum in an expanding industry. Further, it has a balance sheet that can support both capital management and incremental acquisitions.
Getting off the canvas
FY23 result. SGR’s full year result was above its emaciated guidance range in a market characterised by weak demand and rising costs, for which SGR dug out part of its planned $100m per annum target.
Is digital a miss?
TAH reported an EBITDA that exceeded market expectations, primarily attributed to a reduction in OPEX which came in lower than anticipated.