TPW - Temple & Webster Group

[ShareSuccess]

Temple & Webster launched an on-market buyback of up to 10% of issued capital, running for 12 months from 20-Jun-2025.

This represents an intriguing capital allocation decision for a company whose stock has surged 80% year-to-date and is only just beginning to turn a profit. While momentum is clearly on Temple & Webster's side - with 1H25 results showing 117% NPAT growth to $9.0 million (76% ahead of market expectations) and recent trading updates noting that "growth has accelerated over the half, with half-to-date revenue up 18%" - the timing raises questions about optimal capital deployment.

For a company trading at a FY25e price-to-earnings ratio of 228x with a share price that's gone virtually vertical, is a buyback really the most effective use of capital?

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[Dona Ferentes]

what a strong performer in a tough sector.
...seems to pop on results on a regular basis.

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FY25 financial highlights:
• Revenue of $601m, up 21% vs FY24, supported by growth in both new and repeat customers
• Strong EOFY promotional period, with revenue from 01 June to 30 June 2025 up
28% year-on-year, resulting in an increased deferred revenue balance which will be recognised in FY26
• EBITDA of $18.8m, representing an EBITDA margin of 3.1%, above our FY25 guidance range of 1 – 3%
• NPAT of $11.3m, up $9.5m vs pcp
• Cash balance of $144m as at 30 June2025 with no debt.

Other FY25 highlights:
• Our share of the furniture and homewares market in Australia grew to a record 2.7%,5 up 17% vs pcp
• Active customers at ~1.3 million, up 16% vs pcp
• Revenue per active customer of $456 for FY25, a slight decline from $461 in FY24
• Conversion rate of 3.0%, up 5% vs pcp
• Unprompted brand awareness improved as a result of increased brand marketing activity, moving from position #7 to #6 in the market
• Sales of exclusive products (including private label and exclusive drop-ship) now represent approximately 45% of total revenue
• Fixed costs as a percentage of revenue declined from 11.3% in FY24 to 10.6% in FY25

Trading update and outlook
The new financial year has started strongly, with revenue from 1 July to 11 August 2025 up 28% year-on-year. Home improvement continues to outperform.

Mark Coulter said: “We are pleased that the momentum we built throughout the second half of FY25 has continued into FY26. With anticipated interest rate reductions, coupled with stimulatory government policies relating to housing, we remain optimistic that conditions in FY26 should be favourable for the furniture, homewares and home improvement categories.
“In FY26, we are guiding to an EBITDA margin in the range of 3 – 5%, targeting the mid-point of the range, driven by leverage on our fixed cost base and FY24/25 marketing investments.
“The strength of our balance sheet position, with $144m of cash and no debt, allows us to continue executing towards our goal of becoming Australia’s largest retailer of furniture and homewares.”

...the third largest holding in Mirrabooka portfolio, at 3.9%