Key Highlights

  • Revenue rose 17.6% to A$938.8 million for FY26.
  • Comparable store sales grew 2.0%, while the company opened 160 new stores.
  • EBIT rose 14.1% to A$158.2 million, and net profit after tax rose 10.7% to A$95.6 million.
  • Gross Margin rose 60 basis points to 82.6%, and the full-year Dividend was 86 cents per share, up 11.7%.

Why does Lovisa Holdings (ASX:LOV) report double-digit sales growth while comparable store sales rise by only low single digits? The answer is store rollout. In FY26 the fast-fashion jewellery retailer lifted Revenue 17.6% to A$938.8m, but comparable store sales grew just 2.0%. Most of the growth came from opening 160 new stores, which is the central feature of the Investment case and the main thing to test.

The central development

Lovisa announced its FY26 results on 26 August 2026.

Revenue of A$938.8m, up 17.6%.

Comparable store sales growth of 2.0%.

EBIT of A$158.2m, up 14.1%, and net profit after tax of A$95.6m, up 10.7%.

Gross margin up 60 basis points to 82.6%, which management credited to sourcing and promotional efficiency.

A full-year dividend of 86 cents per share, up 11.7%.

Profit therefore grew more slowly than sales. That is a sign that costs, including store occupancy, labour and other overheads, rose faster than gross profit, even though gross margin improved.

How the Business makes money

Lovisa sells low-priced jewellery and accessories through small, high-turnover stores in shopping centres and high-street locations. Revenue depends on the number of stores, sales per store (measured by comparable sales) and the gross margin earned on product sourced from suppliers, largely in Asia. The very high gross margin of 82.6% reflects low unit costs and a high Volume of new-season products, but it also means Earnings depend heavily on store rents, wages and the ability to hold sales densities as the network expands.

Management's strategy is to replicate its store model across many countries. At the end of FY26 the network totalled 1,136 stores in more than 50 markets after 160 openings, 43 closures of underperforming stores and 12 relocations. Europe was the most active region, with 76 openings including 34 in the United Kingdom and 20 in Germany.

Trading update

The company said that for the first eight weeks of FY27 total sales grew 16.4% in constant currency, with comparable store sales up 3.0%, and that momentum improved in August. This is management's reported trading data rather than guidance for the full year.

Sector and competitive position

Lovisa operates in accessories, a segment where competition spans global fast-fashion chains, department stores, online-only sellers and independent jewellers. Its competitive edge rests on speed to market, tightly managed Supply chains and the ability to open and close stores quickly at low Capital cost. It differs from many Australian retailers in that most of its revenue and growth now come from overseas markets. This diversifies exposure to Australian consumer conditions, but adds currency, Tariff and regulatory exposures that vary by country.

Capital returns and balance sheet

Store closures also show management is willing to prune weaker sites rather than hold them for the sake of network size.

Material risks

Store productivity: if new stores in newer markets earn lower sales per store than the existing network, group margins can compress even with encouraging revenue growth.

Comparable sales: comparable growth of 2.0% is modest, so any slowdown in discretionary spending could turn into negative like-for-like sales.

Sourcing and trade policy: the business relies on imported product, so tariffs, freight costs and currency moves can affect margins.

Execution: entering and managing more than 50 markets raises compliance, supply chain and management complexity.

Fashion risk: product trends can change quickly, and a stock of unsold items would damage margins.

What to monitor

Key indicators are comparable store sales in the United States and Europe, the pace of openings against closures, gross margin retention, and whether cost growth moderates relative to sales. Commentary on tariffs and consumer Demand in the key Christmas trading period will also be relevant.

Lovisa remains a store-rollout story with healthy cash generation. The test is whether comparable sales can improve alongside new openings so that profit growth catches up with revenue.