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Fashion jewellery chain Lovisa has reported strong revenue growth in its latest report, driven by overseas expansion.
Fashion jewellery chain Lovisa has reported strong revenue growth in its latest report, driven by overseas expansion.

Lovisa defies retail downturn; plans new stores

Australian fashion jewellery retailer Lovisa has recorded strong results in its latest financial report, with revenue increasing 22.2 per cent, to $162.8 million, in the six months to 31 December 2019.

Gross profit also rose by 19.1 per cent, to $128.5 million. The strong financial results were attributed to an aggressive international expansion strategy; Lovisa opened 42 new stores overseas during the period, including four in the UK, 10 in France and 21 in the US.

Its largest market remains Australia and New Zealand, which accounts for more than 50 per cent of revenue. According to its FY19 annual report, it operates 154 stores in Australia and 22 in New Zealand.

The Lovisa share price rose 26.6 per cent, to $9.80, following the report’s release.

Shane Fallscheer, managing director Lovisa, said, “We are pleased with the momentum of the store rollout during the period which has again delivered us strong top line sales growth, and despite the investment required to deliver this growth we have also managed to deliver solid growth in profit.”

Shane Fallscheer, Lovisa
Shane Fallscheer, Lovisa
"We are pleased with the momentum of the store rollout during the period which has again delivered us strong top line sales growth"
Shane Fallscheer, Lovisa

Fallscheer added that the business would continue to focus on bricks-and-mortar trading – particularly in the US and France – alongside online shopping.

“[E-commerce] is a pillar of our business moving forward… At the same time, I'd flag that fashion jewellery is a category online that has low transaction value, with freight costs and so on. We’re not planning for it to be a serial driver of our business in the short- to mid-term,” he told the Australian Financial Review.

However, while Lovisa has continued to defy what some industry commentators have termed Australia’s ‘retail apocalypse’, the half-yearly report did note several upcoming challenges.

The brand’s like-for-like sales fell 0.5 per cent, while margins shrunk 2 per cent – a trend that Lovisa management predicts will continue.

In addition, the company’s sales in Singapore and Malaysia, as well as its global supply chain, are expected to be negatively impacted by the spread of the coronavirus – though the full impact “cannot currently be reliably estimated”.

“We are focused on doing all we can to work with our suppliers to maintain stock levels in our stores and minimise the impact on our business,” the report noted.

Lovisa was founded in 2010 by Fallscheer and BB Retail Capital chairman Brett Blundy, the former owner of Diva stores.

 

More reading:
Fashion jewellery chain is latest retail casualty
Australian retailer ‘invades’ South Africa
Buoyant Lovisa stock paves way for expansion











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