Lovisa delivers double-digit growth

Jewellery retailer Lovisa has delivered double-digit growth across revenue and net profit after tax (NPAT) after adding 38 stores internationally to its portfolio.

The company earned $217 million in revenue for the 2017-18 financial year, a 21.4 per cent increase over the previous year’s $178.7 million, while NPAT rose by 23.8 per cent to reach $36 million, compared to $29 million in the year prior.

Earnings per share grew to 34.2 cents, compared to 27.7 cents last year.

“We have been able to continue the momentum from the very strong start to the year through the second half in the face of some great ranges from prior year and four years of strong comps to deliver another excellent result,” Lovisa managing director Shane Fallscheer said.

“It’s pleasing that we were able to continue to invest into the structures to support our global expansion and at the same time continue to deliver strong results from existing markets.”

The retailer saw sales grow across all regions, both on a total and same-store basis, with established territories Australia/NZ and Asia performing well while growth in South Africa was driven by the acquisition of the Klines business in May 2017.

Store rollout in the UK accelerated growth in the European region with 13 stores added for the year, alongside five in Spain and two in France.

The impact of continued investment into the international structure of the business and entry into new markets was offset by continued strong operating cost control, with cost of doing business maintained at 53 per cent of sales.

Lovisa plans to launch an e-commerce site in FY19, with efforts to create a more efficient supply chain through a new logistics partner and migrate its third party logistics hub from Hong Kong to Qingdao, China, already underway.

Board renewal

In an effort to drive the international rollout of the business, Lovisa is in the process of sourcing a global chief operating officer, as well as other senior leadership positions.

Director and chairman Michael Kay will be stepping down from his role effective October 31 after two years in the position, while co-founder Brett Blundy will assume the role of chairman effective November 1. An independent non-executive director will be appointed at a later date.

Future outlook

Despite delivering strong comparable store sales over recent years, the first seven weeks of FY19 have seen sales grow at a slower pace than the 3 to 5 percent long-term target range.

Nevertheless, the company plans to further accelerate its store rollout in FY19. Lovisa expects to go into the holiday period with at least seven stores each in the US, France and Spain, which currently have one, two and five stores respectively.

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