Lovisa (LOV) the latest retailer to guide soft
Stock
Lovisa (LOV) $6.66 as at 30/10/2018
Event
Fast fashion jewellery chain Lovisa has tumbled today, down 20% taking the total decline from the June highs to nearly 50%. At the company’s AGM today, same store sales were flagged as lower than previously expected, well below longer term targets. Over the past few years, Lovisa has managed incremental gains to same store sales, often growing between 3-5% each year. After a poor start to FY19, the company has seen comparable sales falling -0.9% on last year. The company did note “that both Spring Racing and especially Christmas are still to come and play a very large part of both our first half and full year’s performance.”
The jeweller blamed a lack of wage growth as well as rising interest rates & falling house prices as contributing factors to the general soft retail environment which has already caused a number of names to lower expectations over the past few weeks. Lovisa is turning to store number growth and lowering costs to limit the impact soft same store sales growth will have, however on 16x FY19 earnings post today's drop, there is still some optimism built into that multiple.
Lovisa (LOV) Chart
Market Matters Take/Outlook
