Adairs vs Temple & Webster: Which ASX retail stock wins for October?

Adairs vs Temple & Webster Group shares: Which retailer is better in October?

Australians shopping for homewares and furniture are often choosing between Adairs Ltd (ASX: ADH) and Temple & Webster Group Ltd (ASX: TPW). That makes their shares equally interesting for investors keen on the retail sector, especially as both names are now staples in bedding, furniture, and décor. So, if you’re weighing up Adairs vs Temple & Webster Group shares right now, let’s unpack their standout differences to see which might be the pick heading into October.

The case for Adairs

Adairs is a well-known bricks-and-mortar and online homewares retailer in Australia and New Zealand. With a presence in more than 170 stores (as suggested by its company profile) plus a solid e-commerce platform, Adairs offers everything from bedding and towels to lighting, furniture, nursery gear, and pet products. Its brands — Adairs, Mocka, and Focus on Furniture — give it a broad reach across budget and mid-market segments.

What’s striking about Adairs in this snapshot is its dividend profile. The company’s dividend yield sits at 8.91%, and all its dividends are fully franked — an appealing feature for Aussie investors who prefer those tax credits. Notably, the dividend per share for the most recent period was $0.12, with payments historically consistent and fully franked.

However, Adairs shows an earnings per share (EPS) of -0.222, putting it in negative earnings territory based on the figures provided. Its market cap stands at $229.52 million, with a P/E ratio of 14.33 (though with negative EPS, this may reflect alternative earnings metrics).

Year to date, Adairs’ shares are down 20.4%, which suggests a softer period for sentiment or profit, but could also potentially offer value for turnaround seekers.

The case for Temple & Webster

Temple & Webster is Australia’s leading online-only destination for furniture and homewares — it doesn’t operate physical stores. With a whopping range of over 200,000 products and “more than a million” Aussie subscribers (according to its most recent company profile), Temple & Webster has carved out a reputation for variety and e-commerce convenience. Its private label, Milan Direct, sits alongside curated branded pieces that cover office, living, lighting, wall art, and more.

Temple & Webster’s fundamentals show a market cap of $490.66 million, making it more than twice the size of Adairs by that measure. It is solidly profitable per the supplied EPS of 0.064. It’s worth noting, though, that Temple & Webster pays no dividend and has no franking, meaning investors are relying purely on share price appreciation for returns.

However, the P/E ratio is an eye-popping 121.04 — a figure that jumps off the page, and seems based on positive underlying earnings, though it may factor in forward or adjusted metrics given the EPS. Year to date, the company has suffered a very sharp fall of 69.3%, suggesting the market is penalising it for stalling growth or stretched valuation.

Valuation comparison

Here’s how the two line up on the most relevant valuation and shareholder return data:

Note: Adairs Ltd’s P/E ratio is positive despite a negative EPS, which suggests the reported ratio may be based on an underlying or forecasted earnings figure not directly shown here.

Temple & Webster’s P/E, on the other hand, is exceptionally high, typical of fast-growth tech or online retailers — but only justifiable if growth resumes.

Recent share price performance

Comparing recent share price action up to September 2026:

• Adairs closed at $1.29 on 28 Sep 2026, down 0.78% for the day, and sunk 20.4% for the year to date.
• Temple & Webster Group closed at $4.21 on 28 Sep 2026, up a modest 0.24% for the day, but a whopping 69.3% lower year to date.

Both retailers have copped a battering, but Temple & Webster’s share price decline has been far steeper over 2026 so far.

Which is the better buy?

Both these retailers face tough market conditions, but if I had to choose in October, my pick would be Adairs. Here’s why:

Adairs offers a substantial, fully franked dividend yield near 9%, which softens the blow of recent price falls and provides steady income. Even as its share price has slipped this year, that yield looks enticing, especially compared with Temple & Webster’s zero dividend.

Temple & Webster still promises online growth and is much larger by market cap, but its P/E ratio is well over 120 — a level I can’t justify based on its current growth and the fact its shares have cratered nearly 70% this year. The lack of a dividend and severe negative momentum make it hard to see an immediate turnaround.

Both may recover if consumer sentiment improves, but for now, I’d lean towards Adairs as a better income and relative value play for October, especially if you’re after returns you can bank on regardless of what the share price does next.

The post Adairs vs Temple & Webster: Which ASX retail stock wins for October? appeared first on The Motley Fool Australia.

More reading

• Where I’d invest in ASX shares after the recent RBA rate rise
• This ASX retail stock is sliding today after a surprise CEO exit
• Temple & Webster vs Nick Scali: Which furniture share is better?
• Treasury Wine Estates vs Temple & Webster: Which beaten down ASX stock is better value?
• 3 ASX shares down 40% to 80% I’d buy on the cheap

Motley Fool contributor Laura Stewart 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 Adairs and Temple & Webster Group. The Motley Fool Australia has positions in and has recommended Adairs. 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.