The Lovisa Holdings Ltd (ASX: LOV) share price dropped 3% in early reaction to news of a class action.
Lovisa is a jewellery retailer that sells affordable products to shoppers in various countries such as Australia, the USA, China, Vietnam, the UK, France, Germany, Italy, Spain, Canada and many more. It’s a truly global business.
Class action proceedings
Lovisa announced to the ASX this morning that it has been served with a representative class action proceeding that has been filed in the Federal Court of Australia by Adero Law about allegations of Lovisa underpaying staff.
The allegations relate to the period of 23 January 2019 to 23 January 2025 Lovisa also noted “related claims” in the announcement, without giving any more detail about that aspect.
Lovisa said it takes its obligations under the Fair Work Act and the Lovisa Enterprise Agreements of 2014 and 2022 “very seriously, including obligations to pay overtime, and has processes in place to monitor compliance with employment laws”.
The ASX retail share said that it intends to defend the class action proceedings and will “provide further updates to the market as and when appropriate.”
The allegations
On the Adero Law website, the firm outlined three allegations that it said it has become aware of:
- Directing staff not to take meal breaks and/or toilet breaks during periods of extended shifts;
- Directing staff to work pre-shift and post-shift hours without compensation; and
- The offering of Individual Flexibility Agreements that require workers to perform additional hours during Christmas sales periods in contravention of industrial instruments and without payment of appropriate overtime rates.
Adero said that it planned to seek recovery of underpayments due to breaches of the Lovisa Enterprise Agreement 2014, owed to current and former employees from 2019 to current date.
What to make of this for Lovisa shares
The market was initially negative but now the Lovisa share price is close to flat compared to yesterday.
I have no knowledge of whether the class action will be successful or not, but it’s not a positive look for Lovisa. Will this mean there are higher costs going forward if it hasn’t been paying enough? Time will tell about the fallout of this.
I don’t own Lovisa shares and I wouldn’t want to buy much at the current valuation – I’d want to wait for a cheaper price during market worries about retailers.
