Lovisa reopens stores but exits Spanish market

Lovisa reopens stores but exits Spanish market

Jewellery retailer Lovisa (ASX: LOV) has now reopened the vast majority of stores worldwide following closures sparked by the COVID-19 pandemic, but strained relationships with landlords has led to an exit from Spain.

There are now 434 Lovisa stores worldwide including franchises that are trading, compared to 449 in March before shutdowns began.

"We are now pleased to announce that our business has re-opened beginning in mid-April with the Australian stores, and progressively across all company-owned markets with the UK the last to re-open in late June," the company said in an announcement after ASX trading closed yesterday.

Lovisa explained the disruption to normal trading conditions throughout the fourth quarter led to a significant reduction in sales revenue for the full year, which ended up down almost 5 per cent at $237 million.

"Comparable store sales for the period since stores have re-opened, based on the actual days each store traded, were down 32.5 per cent on last year," the company said.

"Performance has been strongest in Australia and New Zealand as the markets that have been trading longest post re-opening and with the least restrictions in place.

"Our online business was able to deliver 256 per cent growth on prior year during Q4, with trading websites now operational across most markets that Lovisa is represented in."

Even before COVID-19 Lovisa's roll-out of stores in Spain was put on hold as performance was below expectations, but now its nine shut stores in the country will remain out of action as discontinued.

"Whilst we saw some improvement in performance prior to the COVID-19 shut-down, Lovisa was disappointed in the lack of support from our landlords in Spain," the company said.

"Hence, due to this lack of support the board has regretfully made the decision not to re-open these stores and to exit the Spanish market.

Lovisa said this meant an impairment charge of around two million euros (AUD$3.3 million) was expected for FY20.

LOV shares were up 2.45 per cent at $6.26 each in early trading this morning. 

Updated at 10:36am AEST on 3 July 2020.

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