Temple & Webster’s steady rebound following a challenging year

Temple & Webster (ASX:TPW), a standout during the pandemic's online retailing surge, is now on the path to recovery after facing difficulties for most of the 2022-23 financial year.

In the year leading up to June, revenue experienced a 7.2% decline, dropping from $426.3 million in the pandemic-fueled year of 2021-22 to $395.5 million.

Consequently, pre-tax earnings took a nearly 10% hit, falling from $13.25 million the previous year to $11.963 million. After accounting for taxes, earnings plummeted significantly by 30.6%, reaching $8.3 million, a sharp decline from almost $12 million in 2021-22.

"Pleasingly, approximately 90% of the COVID-19-affected revenue was retained in FY23. The Group managed to regain year-on-year revenue growth in Q4FY23. The year's EBITDA totaled $14.8 million (3.7%), aligning with the Group's stated range of 3-5%," the company announced in its earnings release.

"The second half of FY23 witnessed an 80% increase in EBITDA compared to the previous corresponding period (pcp). This improvement was attributed to enhanced delivered margins and adept cost management, with AI-driven efficiency gains yielding promising initial outcomes."

In fact, the commentary prominently highlighted the June quarter's recovery, with the company affirming that the "positive momentum" from the fourth quarter had carried over into FY24. Year-to-date revenue up to August 13th exhibited a 16% increase compared to pcp.

CEO Mark Coulter remarked on Tuesday, "The positive momentum initiated in Q4 FY23 has gained even more traction in FY24. Revenue up to August 13th is up 16% compared to PCP, driven by growth in both repeat and first-time customers."

"We've commenced FY24 on a robust note. Although the immediate macroeconomic landscape will continue to exert pressure on the sector, our well-structured business model, diverse product offering, favorable customer metrics, and proficient AI capabilities instill confidence in us to aggressively pursue market share in the short term, leading to substantial long-term benefits."

"Our inventory management remains effective, and the company is in its strongest financial position ever. While we have the capacity to allocate funds to support our growth strategies, we will do so judiciously, maintaining profitability at all junctures."

"Our ongoing $30 million on-market buyback will further enhance shareholder returns in the absence of more lucrative opportunities. To date, we've repurchased 2.7 million shares at a total cost of $12.3 million."

"We remain unwavering in our commitment to the overarching objective of becoming Australia's leading retailer of furniture and homewares."

Once again, there will be no dividends distributed.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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