Temple & Webster (ASX:TPW) share price tumbles on third quarter update

The Temple & Webster Group Ltd (ASX:TPW) share price is under pressure on Tuesday following the release of its third quarter update…

| More on:
Investor covering eyes in front of laptop

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 under pressure on Tuesday morning.

At the time of writing, the furniture and homewares focused ecommerce company's shares are down 5% to $10.18.

Why is the Temple & Webster share price under pressure?

Investors have been selling the company's shares this morning following the release of its third quarter update.

According to the release, for the three months ended 31 March, Temple & Webster delivered a 112% increase in revenue over the prior corresponding period.

At the end of the period the company had ~750,000 active customers. This is up 10.6% from 678,000 at the end of the first half.

What about the fourth quarter?

Positively, while the company's growth has moderated so far in the fourth quarter, its revenue is still higher than the prior corresponding period.

During the month of April, Temple & Webster achieved a 20% increase in revenue over the prior corresponding period. This is particularly impressive given that April 2020 was the fastest growing month last year due to the nationwide lockdowns.

Pleasingly, the company also reported that COVID-19 cohorts continue to perform better than historical cohorts.

Why are its shares trading lower?

Possibly weighing on Temple & Webster's share price was management's commentary relating to the future and its focus on revenue growth rather than earnings.

The company believes that COVID-19 has permanently accelerated online adoption in the Australian furniture and homewares market.

It explained: "… we estimate more than 20% of furniture & homewares was bought online in the US during 2020, and we believe Australia is following the same trajectory. We estimate that in 2020, ~9% of Australian furniture & homewares were bought online, an almost doubling of the ~5% bought in 2019. Online penetration in both markets is expected to continue to increase significantly."

In light of the above and its online market leadership position, the company has reaffirmed its growth strategy.

This will see it building strong brand awareness to achieve a national brand status, using "tactical" pricing and promotions to increase conversion, investing in 3D and artificial intelligence capabilities, differentiating its range through new category additions and private label expansion, and growing its B2B sales teams.

This will of course come at a cost. As a result, management intends to focus on delivering strong double digit revenue growth with EBITDA margins in the 2% to 4% range.

Temple & Webster CEO & Co-Founder, Mark Coulter, said "You only need to look at the US to see how the e-commerce market is playing out, and why we remain bullish about the shift from offline to online. We are at the start of this once in a generation shift, and now is the time to put our foot down to secure market leadership and ensure we are the brand for the next generation of furniture shopper."

Should you invest $1,000 in Link Administration right now?

Before you buy Link Administration shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Link Administration wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Fallers

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 »

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 Healius, Light & Wonder, REA Group, and Regis Resources shares are falling today

These shares are ending the week in the red. Let's find out why.

Read more »