- First-quarter trading for Temple & Webster (ASX:TPW) has been strong with improvement in operating leverage. EBITDA for the first quarter was better than FY20 EBITDA.
- Customer satisfaction remains at record levels.
- The company highlighted that the target market is around $15 billion in size with significant under penetration in online category.
Temple & Webster Group Ltd (ASX:TPW) shares crashed significantly during the early trading hours on 21 October 2020.
Temple & Webster conducted Annual General Meeting today. It is understood that the company has been a big beneficiary of the underlying change in the Australian economy driven by accelerated take-up of e-commerce.
The management has been effective in positioning the company to benefit from the change and adapt to new operating conditions in the wake of the pandemic.
In FY20, the Australian economy has gone through the worst bushfire season on record and a global pandemic. The leadership team at the company was focused on scaling the business. They engaged with their vendors and deployed teams to buy stock from suppliers.
Over the year, active customers grew by 77%. It was understood that the number was close to half a million, and customer satisfaction was also at record levels. The company intends to ensure that first-time customers get the best service and experience.
The Chairman of the Board noted that the leadership has been instrumental in adapting to business continuity plans with cybersecurity and IT access. There was implementation of a communication program to manage the remote working environment. All this has delivered better customer satisfaction levels.
It was suggested that Temple & Webster continues to gain market share, driven by the increasing benefit on a larger scale. The company is also embarking on close relationships with suppliers, allowing it to secure stock security, better terms and exclusive product ranges.
Temple & Webster is also making investments in technology, data, private label products and brand awareness. The company noted that its target market is around $15 billion in size with accelerating online adoption.
The Australian online market continues to grow but remains underpenetrated compared to other developed markets. The measures undertaken by the Government in the wake of the pandemic has driven the need for online retailing.
First-quarter trading update
FY21 was kicked-off strongly with the realisation of operating leverage. Year to date (1 July to 19 October) revenue was up 138% over the same period last year. EBITDA in the first quarter was $8.6 million, which is higher than full-year FY20 EBITDA.
October is witnessing strong growth, and peak trading for the business is underway. It was said that contribution margins are running ahead of the 15% target. With a net promoter score of ~70%, customer satisfaction remains high.
The management is committed to a high growth strategy that positions the company to benefit from the structural shift towards online, and capitalise on organic and inorganic growth.
On 21 October 2020 (AEST 03:15 PM), TPW traded at $11.830, down by 15.681% from the previous close.