Why the Temple & Webster (ASX:TPW) share price is tumbling lower today

The Temple & Webster Group Ltd (ASX:TPW) share price is tumbling lower following the release of a trading update at its AGM…

| More on:
living room with sofa, cushions and coffee table and decor items

Image source; Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Temple & Webster Group Ltd (ASX: TPW) share price is dropping lower on the day of its annual general meeting.

At the time of writing the online homewares and furniture retailer's shares are down 2.5% to $13.70.

Why is the Temple & Webster share price dropping lower?

Investors have been selling the company's shares this morning despite its annual general meeting presentation including a trading update which reveals that its exceptionally strong growth has continued in October.

According to the release, as of 19 October 2020, financial year to date, Temple & Webster's revenue was up 138% on the prior corresponding period. Revenue growth so far in October is up over 100% year on year.

This strong top line growth led to its earnings before interest, tax, depreciation and amortisation (EBITDA) coming in at $8.6 million for the first quarter. While no figure was provided for the prior corresponding period, management notes that this is more than the entire EBITDA it generated in FY 2020.

A key driver of this strong earnings growth was Temple & Webster's contribution margin. This is its margin after all variable costs including advertising and customer service costs. Management advised that its contribution margins continue to run ahead of its 15% target.

Finally, another positive is its customer satisfaction, which remains at record levels. The release shows that its Net Promoter Score is ~70%.

What now?

No guidance has been given for the remainder of the half or full year.

Management has reiterated that Temple & Webster is committed to a high growth strategy to take advantage of the structural shift towards online and capitalise on both organic and inorganic opportunities.

It also notes that its core furniture and homewares category is a ~$15 billion market, with accelerating online adoption.

The company's CEO, Mark Coulter, commented: "Lock-downs and forced offline retail closures have no doubt accelerated the adoption of online shopping in our category, however we believe these trends were already at play as the oldest millennials enter their prime furniture buying years (35-65 years). This generation of shopper has already adopted online shopping to a high degree in other categories such as fashion and appliances, and we believe the furniture and homewares category is next."

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Dexus, Mayne Pharma, Nufarm, and Treasury Wine shares are falling today

These shares are having a tough session on Thursday. But why?

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why James Hardie, Mayne Pharma, Nufarm, and Resimac shares are falling today

These shares are having a tough time on hump day. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Kogan, Monash IVF, OFX, and ResMed shares are falling today

Why are these shares taking a tumble today? Let's find out.

Read more »

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash
Share Fallers

Why Appen, DroneShield, Gentrack, and New Hope shares are dropping today

These shares are starting the week in the red. But why?

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Dexus, Dusk, Fletcher Building, and Paladin Energy shares are falling today

These shares are ending the week in the red. But why?

Read more »

Couple look at a bottle of wine while trying to decide what to buy.
Consumer Staples & Discretionary Shares

Treasury Wine shares: Buy, hold, or sell? Here's Macquarie's take

What is Macquarie forecasting for Treasury Wine shares amid the CEO’s unexpected exit?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Newmont, NRW, Peet, and Treasury Wine shares are dropping today

Let's find out why investors are selling down these shares on Thursday.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Aristocrat, EBR, GQG, and Insignia shares are tumbling today

These shares are having a tough time on hump day. Let's find out why.

Read more »