Stock of the Week: Temple and Webster

Stock-of-the-week-July-31

Online homewares retailer Temple & Webster has had a stellar 12 months… not just increasing sales but also share price rise.

This week it reported full-year revenue has spiked by almost three-quarters to $176 million, as the coronavirus lockdown played into the hands of the online retailers. Just last month, the online furniture retailer raised $40 million from shareholders to help bolster its digital offering following the surge in sales during the pandemic.

I asked the experts on The Call, Andrew Page from Strawman and Julia Lee from Burman Invest, to give me their takes on the online furniture retailer. Julia says she realises that the stock is looking expensive but when we look at the upgrades and momentum coming through, those multiples can fall very quickly.

She adds, “The great thing about this business is that it has fixed costs… when you see the acceleration in terms of momentum… those fixed costs remain stable and those extra sales go down to the profit line. Temple and Webster is a great stock for these times.”

Andrew is in agreement with Julia, however, he would like to watch the stock rather than buying at these levels.

“What I like about Temple and Webster… they do what’s called drop shipping, passing it through to the manufacturers who directly deliver to the consumer, it’s a lovely, lovely business model.

“The question is whether they can maintain these high-levels of sales growth.” 

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