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Lovisa (ASX:LOV) - Managing Director, Shane Fallscheer
Managing Director, Shane Fallscheer
Source: Sydney Morning Herald
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  • Lovisa’s (LOV) revenue was down 9.8 per cent to $146.9 million in H1 FY21, primarily due to COVID-19 store closures in Q1
  • Its gross profit was down 11.7 per cent to $113.4 million while earnings before interest, taxes, depreciation and amortisation were down 15.2 per cent to $39.6 million
  • Due to COVID-19, Lovisa’s online sales accelerated during the half with sales growing 335 per cent
  • Despite the pandemic, Lovisa’s brand continued to grow in the U.S. and Europe with 14 stores opened in the States and four in France
  • Unfortunately, sales in Asia continued to be slow but sales at Australian and New Zealand stores were a standout
  • Finally, the acquisition of German wholesaler beeline is expected to be completed in mid-May
  • Lovisa is up a healthy 18.7 per cent on the market and shares are trading at $13.06

Lovisa’s (LOV) revenue was down 9.8 per cent to $146.9 million in H1 FY21, primarily due to COVID-19 store closures in Q1.

Its gross profit was down 11.7 per cent from $128.5 million in H1 FY20 to $113.4 million in H1 FY21.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) was down 15.2 per cent from the prior corresponding period (pcp) to $39.6 million, while EBIT was down 23.6 per cent to $30.9 million.

Despite the amounts being lower than the pcp, Lovisa is pleased with its performance in this challenging time.

“We are pleased with the performance of the business for the half-year, in particular with the improving sales performance we saw through Q2 despite the continued global challenges we face with the impact of COVID,” Managing Director Shane Fallscheer commented.

Digital sales

Due to COVID-19, Lovisa’s online sales accelerated during the half with sales growing 335 per cent.

Online sales remain a key aspect for the company as it provides customers with a new shopping experience.

Operations

Despite the pandemic, Lovisa’s brand continued to grow in the U.S. and Europe with 14 stores opened in the States and four in France.

Unfortunately, sales in Asia continued to be slow, resulting from low tourism and movement restrictions.

Lovisa’s Australian and New Zealand stores were a standout with positive comparable store sales for the half-year.

However, the extended closure of Victorian stores resulted in sales being down 0.4 per cent over the pcp.

At the end of the half there was 156 stores across Australia, 63 in South Africa, 62 in the U.S., and 25 in France.

beeline acquisition

Lovisa first announced its intention to acquire beeline in mid-November 2020, with more than 80 stores to be added to its global network.

The purchase price for the shares in beeline is €70 (around A$108) with €11.8 million (around A$18.3 million) to be acquired upon completion.

Of the 114 stores Lovisa is set to acquire, around 90 will be converted to Lovisa stores to begin trading. The remainder are set to be closed as they are unsuitable for business.

Handover of the stores will begin in early March and is expected to be completed in early May.

Outlook

Trading for the first seven weeks of H2 FY21 has been strong in Lovisa’s Southern Hemisphere markets but remains weak in the north.

The beeline acquisition is expected to add significant value to the company’s balance sheet which remains strong.

Due to uncertain market conditions, Lovisa cannot provide further information.

Lovisa is up a healthy 18.7 per cent on the market and shares are trading at $13.06 at 2:21 pm AEDT.

LOV by the numbers
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