Temple & Webster (ASX:TPW) reported its half year earnings on Tuesday and was punished by the market with a 27% drop in its share price. Was this share price tumble overblown?
There certainly were some negative indicators:
❌ YoY revenue decline of 12% for the first half
❌ Pull-back of investment in thebuild.com.au as it takes a longer view on it
❌ Active customers decreased 10% to 840,000 in the FY23 half-year
❌ Uncertainty in trading outlook given impact of interest rate rises on household spending
However (not investment advice), there are definitely some things for the Company to be pleased about:
ShopGrok‘s data shows that TPW executed, at first glance, a quite disciplined approach to pricing and promotion in the 1st half, with strategic pricing initiatives & better sourcing leading to a 180bp gross margin improvement:
✅ 1-3% increase in baseline pricing to help expand margins, while maintaining sales growth
✅ Heavy discounting kept to sale periods to maximise promotional effectiveness
✅ Sale periods show large increases in shallow discounts (0-20% off) and moderate increase in mid-level discounts (20-50% off), but don’t resort to heavy 50%+ off / clearance which typically punctuates many AU retailers’ mid season sale
✅ Sale periods have strong marketing, creative and execution
Add to this some of the other positives from the HY report and it would appear that TPW may be better positioned to navigate a potentially tough upcoming trading period than others in the market:
✅ Outperformance of private label / value range (28% contribution and growing) positions the business well for tougher market trading conditions and increasingly value-conscious consumers
✅ Revenue growth in the month of December 2022, the first month which was not impacted by prior year lockdowns or Omicron
✅ Revenue per active customer increased 7% due to an increase in the average order value and an increase in repeat orders, with 57% of orders coming from repeat customers.
If you are a retailer or brand looking for data-driven insights to better navigate your pricing, promotions or ranging strategy, reach out to us to see the tailored solutions ShopGrok offers to your retail vertical.
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