LOV missed expectations when it reported in February Here and the stocks suffered accordingly. We like to buy companies that are performing well but are being dragged lower by conditions out of their control, especially for a stock like LOV which is trading on 27x – its priced for growth which its now starting to find increasingly hard.
Lovisa operates small-format stores in high-traffic locations globally, selling fast-fashion jewellery and accessories at low price points (~$5–$50). Its vertically integrated model—designing and sourcing all products in-house—supports industry-leading margins (~82%), while growth is driven by rapid store rollout and frequent product turnover, with 1,000+ stores across 50 countries.
The headwinds are hitting LOV multiple directions at once. Cost pressures are a concern, while at the same time, comparable store sales growth has been decelerating, slowing to 3.5% from 5.6% in the first weeks of FY26, raising questions about whether new store openings can continue to offset softening like-for-like performance. Also, the home market of Australia and New Zealand has been a persistent underperformer. And with the stock trading at a significant premium to the retail sector, the margin for error is narrow at best, LOV is priced for perfection in an environment that is anything but.
Successful investing is just as much about what you pass up, as what you buy and until further notice even through LOV has more than halved, it’s not yet attractive to us.
- We can see LOV rotating between $20 and $25 in 2026 but another downside surprise isn’t out of the question, i.e. we’re on the fence.
MM is neutral towards LOV around $23
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