Lovisa Holdings Limited (ASX: LOV) shares are down 4.5% following the release of their Annual General Meeting presentation. Are Lovisa shares now good value?
About Lovisa
Lovisa was established in 2010 and has rapidly become one of Australia’s leading fashion jewelry and accessory retailers. The company has been expanded its store footprint internationally with stores in more than 10 countries including the USA and the UK.
AGM Commentary
Lovisa Chairman Brett Blundy was unable to attend the AGM due to international commitments.
Managing Director Shane Fallscheer provided an overview of Lovisa’s FY19 result where total sales were up 15.3% in FY18. He then highlighted store growth, including discussing the international store rollout which is accelerating with a net increase of 64 stores. International stores now account for 61% of their total store network.
He said the recent US rollout is progressing well with 33 stores currently trading in the US across five states, including California, Texas and Florida. Mr Fallscheeer also said the French rollout is gaining momentum.
Trading Update and Outlook
Mr Fallscheer then said trading since the end of the financial year Lovisa has seen a continuation of the improvement seen in the second half, with comparable store sales for the 17 weeks to date up 2.3%.
However, currency headwinds have begun to have an impact and will continue to do so through FY20. They are continuing their focus on expanding the store network, and continue to expect the increase in a number of stores for FY20 to be higher than in FY19.
On this, 31 net new stores have been opened since 1 July 2019, taking the total store network to 421.
Are Lovisa Shares A Buy?
I like the potential for the international store rollout, however, some of that may already be priced into the shares, which may explain today’s share price movement. Investors may have been expecting more from the trading update.
Retail shares have had a good time of late with shares in JB Hi-Fi Limited (ASX: JBH) hitting an all-time high today, and shares in Kathmandu Holdings Ltd (ASX: KMD) and Premier Investments Limited (ASX: PMV) hovering near their all-time highs.
It hasn’t been all good news for retailers, of course, with furniture retailer Nick Scali Limited (ASX: NCK) recently providing a negative trading update.
The long-running Westpac-Melbourne Institute Consumer Sentiment Index tumbled more than 5% in October to its lowest reading since July 2015. Meaning, if you have doubts about consumers and their ability to spend, you may be more interested in one of companies in the free report below.
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Disclosure: At the time of writing David owns shares in Lovisa.
