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Shares in global jewellery chain Lovisa Holdings (ASX: LOV) lost their sparkle today despite the company revealing a 21 per cent increase in net earnings to $82.4 million.
Lovisa, which operates more than 900 stores globally, delivered a 17.1 per cent increase in revenue to $699 million for FY24, with the gain largely driven by store openings.
However, the company reveals that comparable store sales were down 2 per cent although the trend was improving towards the second half.
While trading for the first eight weeks of FY25 was 2 per cent up on the same time last year, total sales for the period are up 12.7 per cent – or 4.4 percentage points lower than the FY24 full year.
Shares in Lovisa slumped to a low of $30.76 in early trade – or 17.5 per cent – before regaining some lost ground to close at $32.83.
Lovisa opened 128 new stores opened during the period, offset by the closure of 29, pushing its total network to 900 at the end of the period as the group ventured into China, Vietnam and Ireland during the year.
Lovisa also established new franchise markets in Ecuador, Senegal, Guadeloupe and Gabon, boosting its presence to 46 countries.
Since the end of the financial year, Lovisa has opened 10 new stores with two closures, taking its total store count to 908 including the first franchise stores for Ivory Coast and Republic of Congo.
“The company has once again delivered strong sales, gross margin and profit growth at the same time as investing in the structures to support our steady global expansion,” says Lovisa CEO Victor Herrero, who will be replaced as CEO by long-time Smiggle boss John Cheston next year.
“This positions us well to continue our growth in both existing and new markets. I want to again share my appreciation of the entire global Lovisa team for their hard work and dedication to achieve these results.”
With its business built on delivering affordable jewellery to the consumer, Lovisa says it has responded to inflationary pressures globally with a focus on pricing and promotion management which it says has supported both sales growth and gross margins.
Gross profit rose 18.7 per cent to $565.79 million, while gross margin lifted 1.1 percentage points to 81 per cent, which is on top of a 1 percentage-point lift a year earlier.
Lovisa says it continues to focus on executing its e-commerce strategy with further investment in customer experience and support systems including a new product information management system.
“We now have a presence on a number of e-commerce marketplaces globally, including Zalando in Europe, ASOS in the UK, and The Iconic in Australia, and importantly we are now live on key Chinese online marketplaces Tmall, Douyin, Little Red Book, WeChat and JD.com as part of our strategy to build our presence in the market,” says the company.
“We have also invested in dedicated e-commerce fulfilment centres operating in the UK, Malaysia and China.”
Lovisa also opened a new US warehouse this month, a 5,000sqm facility at Columbus, Ohio, to service the company’s growing Americas region which is currently being serviced from its Chinese third-party logistics warehouse.
“This warehouse represents an important step in the growth of our Americas business, currently servicing over 200 stores and provides capacity to support significant future growth across the region,” says the company.
Lovisa is paying a final dividend of 37c per share, taking its total payout for FY24 to 87c.
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