Fashion accessories chain, Lovisa, has posted solid first half results buoyed by new stores.
Lovisa posted a 20.7 per cent increase in revenue to $99.7 million from the previous corresponding period. Gross margin lifts to 77.8 per cent with gross profit up 25.2 per cent to $77.6 million.
Earnings before interest and tax increased by 57.1 per cent to $28.2 million.
“The first half result has been strong, following same store sales growth of 12.6 per cent and a lift in gross margin to 77.8 per cent resulting in an earnings lift of 50 per cent to $20.3 million NPAT,” said Shane Fallscheer, managing director.
Fallscheer said the lift in comparable sales growth was particularly pleasing as it demonstrates the strength of the brand following retail price increases in the first half of 2016.
He said they have continued to expand and optimise their store network to drive growth and performance with a net 18 store increase from June.
“Due diligence on other markets and opportunities to accelerate new country growth continues and we are optimistic about Lovisa’s global rollout plans,” Fallscheer stated.
According to Fallscheer, Lovisa’s same store sales growth was generated predominantly on the back of retail price increases in the first half of 2016 along with the benefits of some key trends in the fashion jewellery sector throughout the half.
“We’ve also enjoyed the tailwinds of Equip, a competitor with 120 stores, exiting the market during the first half of 2015-16 financial year,” he said.
Lovisa has acquired a small group of the stores and the rest were closed. Fallscheer said while they have received the benefit of these tailwinds to date, they will start to cycle through over the coming months which will temper same store growth in the second half.
The company’s managing director said the key driver of future growth for Lovisa is its continued international store rollout. Lovisa’s network increased to 268 stores during the half year being a net increase of 18 stores from June 2016.
Fallscheer said following the strong first half, they expect the second half comparable growth to soften as the prior retail sale price increases cycle through the business along with the benefit of the Equip brand of stores closing in early 2016.
The company will continue its global rollout and they expect 15 stores to be trading in the UK by the end of the financial year, along with other store openings, Fallscheer stated.
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