Lovisa Holdings Ltd

LOV Details

Good start to FY18:Lovisa Holdings Ltd (ASX: LOV) has been leveraging its exposure across the globe with its attractive business. LOV also witnessed a good start to FY18, wherein the same store growth above the long-term target of between 3% and 5% has been indicated. The company has planned to open between 20 and 30 stores for FY 18. Meanwhile, LOV stock has risen 33.01% in three months as on December 20, 2017 as the company had posted 75.5% growth in the NPAT in FY17.

In FY17, the revenue grew 16.5% to $178.7m on FY16 with increases in all international markets. The company has posted same store sale growth of 10.3% and this was generated due to the retail price increases in 2016 along with the benefits of some key trends in the fashion jewellery sector throughout the year. However, the inventory levels have tightened despite store growth and currency headwinds. The group has also mentioned about cycling of some successful ranges over the next few months. Meanwhile, Lovisa has appointed Mr. Chris Lauder as Chief Financial Officer and Company Secretary.
 

Gross Margin Trends (Source: Company Reports)
 
In FY17, LOV had refinanced its bank facilities for a further three years. The available debt facilities have increased to $30 million; and as part of the refinancing, the bank has agreed to additional finance subject to due diligence of $15 million for an acquisition opportunity. On the other hand, LOV stock is trading at a high price to earnings level. We believe that the stock price now takes into account various catalysts; and basis this coupled with trading levels and gross margin trends, we recommend for a “Sell” on the stock at the current price of $6.85


LOV Daily Chart (Source: Thomson Reuters)

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