Temple & Webster shares just crashed 25%. What on earth just happened?

Shares in Temple & Webster Group Ltd (ASX: TPW) have been absolutely smashed on Thursday.

At the time of writing, the Temple & Webster share price is down a brutal 25.49% to $8.45 following the release of its half-year results.

That leaves the stock down around 40% since the start of 2026, wiping out a huge chunk of its recent gains.

Let’s dive into what Temple & Webster actually reported that triggered such a heavy sell-off.

Revenue jumps 20% as market share grows

Temple & Webster reported H1 FY26 revenue of $376 million, up 20% on the prior corresponding period. Management said growth accelerated through the half, with revenue up 20% year-on-year from 1 January to 9 February.

Active customers climbed 14% to 1.4 million, while repeat customers now account for 62% of total orders. Revenue from exclusive products increased to 49% of total revenue, up from 45% a year ago.

EBITDA came in at $13.5 million, or $14.9 million excluding New Zealand start-up costs, representing a margin of around 4%.

So why is the share price crashing today?

The issue appears to come down to margins and expectations.

Despite strong top-line growth, delivered margin declined slightly to 30.5%. While marketing costs improved as a percentage of revenue, investors may have been hoping for stronger operating leverage at this stage of the cycle.

Temple & Webster reaffirmed its FY26 EBITDA margin guidance of 3% to 5%. While that range remains unchanged, it suggests profitability will stay relatively modest compared to the company’s long-term ambitions.

There was also a sharp decline in net profit before tax, which fell 28% to $7.4 million. Depreciation and amortisation increased materially during the half, impacting the bottom line.

Balance sheet remains strong

Temple & Webster ended the half with $161 million in cash and no debt. The company generated $23 million in free cash flow and continues to run an on-market share buyback.

Management reiterated its medium-term target of reaching $1 billion in annual revenue and said it remains on track.

It is also worth remembering that Temple & Webster has historically traded on a premium earnings multiple. With expectations already running high, even a small miss was enough to spark heavy selling.

Foolish takeaway

Today’s 25% plunge shows just how sensitive high-growth retail stocks can be to any hint of margin pressure.

Temple & Webster is still growing revenue at a healthy rate and building market share. However, with the share price already down around 40% this year, investors are clearly demanding stronger evidence of margin expansion and bottom-line growth.

The post Temple & Webster shares just crashed 25%. What on earth just happened? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group. The Motley Fool Australia has recommended Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.