The Lovisa Holdings Ltd (ASX: LOV) share price is down 15% after the retailer reported its FY24 result.
Lovisa sells low-price jewellery in its store network across the world.
FY24 result
Here are the main highlights from the 2024 financial year:
- Revenue increased 17.1% to $698.7 million
- Gross profit rose 18.7% to $565.8 million
- EBIT rose 21.2% to $128.2 million
- Net profit after tax (NPAT) rose 20.9% to $82.4 million
- Operating cashflow soared 27.6% to $240.4 million
- Final dividend increased by 19.3% to $0.37 per share
Lovisa attributed this result to strong growth in its store network, following comparable store sales being down 2% for the year. However, comparable store sales were positive in the second half.
The company said it’s responding to inflationary pressures, with a focus on pricing and promotion management, helping both sales growth and gross profit margin expansion.
During this period, the business invested in entering new markets, new stores in existing markets, and the structures required to manage them effectively on an ongoing basis including support teams, logistics and technology to “drive a more efficient operating model.”
Higher costs, including higher wages, meant the company’s cost of doing business was higher.
The business ended FY24 with 900 stores, up from 801 in FY23. That represents a year-on-year increase of 12.3%. There was growth across the world, with 17 net new stores in the USA, 10 net new stores in Australia and 18 net new stores in France. Store growth is key for the Lovisa share price in the coming years.
During FY23, it renegotiated its franchise contract with its Middle Eastern franchise partner, allowing it to convert its UAE market to company-operated stores.
In August 2024, the business opened its new company-operated 5,000m2 warehouse in Columbus, Ohio. The company said this is an “important step” in the growth of its Americas business as it has the capacity to support “significant future growth” across the region.
Outlook for the Lovisa share price
The company revealed that trading for the first eight weeks saw comparable store sales for the period up 2% year on year. Total sales for the period were up 12.7% on the same period in FY24.
Since the end of FY24, it has opened 10 new stores, with two closures. It now has 908 stores, including its first franchise stores recently opened in Ivory Coast and the Republic of Cango.
The company is enacting its plan for global store growth, while also growing profit, cashflow and the dividend.
I’m a fan and shareholder of this business, though the valuation may have gotten a little ahead of itself in recent months. It’s priced for growth, so I don’t think it’s a great buy today. But, I still believe it can outperform over the long-term.
