Lovisa cuts final dividend, soft start to FY24

afr.com:

Budget jewellery retailer Lovisa Holdings, backed by billionaire retailer Brett Blundy, cut its final dividend as pressure on the costs front mounted with slowing growth in the second half.

Comparable store sales in the first seven weeks of the new financial year were down 5.8 per cent, and total sales up 13.1 per cent. Lovisa shares fell 5.9 per cent to $21.30.

Net profit rose 16.7 per cent to $68.2 million for financial year 2023, lower than consensus of $72 million for the year to July 2. Lovisa posted a 30 per cent rise in annual sales to $596.4 million, underpinned by its store rollout program.

The retailer operates in 39 countries and opened a net 172 new stores in fiscal 2023, taking the network to 801. Lovisa made a big push in the US, opening 78 stores to 190 and making it the group’s biggest market.

Lovisa offers jewellery at a lower price point for consumers. Bloomberg

Earnings before interest and tax was up 27.9 per cent to $105.7 million. A final dividend of 31¢ was declared, down from 37¢ a year ago, to be paid on October 19.

Lovisa’s exposure to a young consumer is not as defensive as previously thought. Youth retailer Universal Store in May posted a soft trading update putting the category on notice.

While Lovisa’s comparable store sales early in the second half were up 12.3 per cent, the group cycled price increases implemented in the year prior and same-store sales softened.

Chief executive Victor Herrero’s long-term incentive plan translated to a $27 million expense recognised in 2023, compared with $18 million in the prior year.

“The company has been able to continue to deliver strong profit growth while investing in the structures to support our global expansion in the face of more difficult trading