Lovisa signals slow start to 2019

LovisaAfter delivering double-digit growth in fiscal 2018, jewellery retailer Lovisa is off to a slower start in 2019.

Lovisa managing director Shane Fallscheer told investors at the company’s annual general meeting on Tuesday that the brand’s recent success is now causing comparative sales to drop, due to the difficulty of the current trading environment.

“We have had four years of very strong comp sales growth on the back of great execution of some major trends in the fashion accessories market,” Fallscheer said.

“Year to date we have traded below our long term target range of 3-5 per cent, with comps for the year to date at -0.9 per cent.”

Fallscheer noted that Spring Racing and Christmas both play a very large part in the retailer’s performance, suggesting that sales could grow before the end of the first half.

At close of business on Tuesday, October 30, Lovisa shares had plummeted 18.45 per cent, from AU$8.40 to AU$6.85 per share ($9.10 to $7.42 per share).

Looking toward the future of Lovisa

Highlighting the company’s recent move into e-commerce in the Australian and New Zealand markets, Lovisa chairman Michael Kay said online sales would be an ongoing part of the retailer’s growth strategy moving forward.

On that front, it’s worth noting that Lovisa has appointed former Coles general manager of online and Myer chief digital and data officer Mark Cripsey to the position of chief operating officer.

However, the jewellery retailer said it would also keep its focus on international markets as a way to lessen its reliance on the Australian market.

Kay noted that the company is pleased with the performance of its two trial stores in California, and is going ahead with five further trial stores in the region before Christmas, while investing in a support structure for the market to facilitate further growth.

“If we can build upon the start in California and replicate this in other states, the US business clearly has the potential to be a significant part of the future of Lovisa,” Kay said.

“We are also aware that the consumer spending cycle is currently in our favour in the USA, with low unemployment and some wage growth… it is important that we take a measured approach to establishing ourselves in this market.”

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