Lovisa (ASX:LOV) management outlined what it called a “milestone” first-half FY2026 result, driven by continued global store expansion and a higher underlying gross margin, while reiterating that results for the period included early-stage contributions from its new trial brand, Jewells.
Sales pass AUD 500 million as store growth continues
Global CEO John Cheston said first-half sales exceeded AUD 500 million for the first time. The retailer opened 85 new stores during the half, taking the network to 1,095 stores across more than 50 markets at the half-year end.
Underlying margin and profit improve; Jewells excluded from “underlying” metrics
Management emphasized that the company’s reported half-year results include performance from Jewells, which began trading with trial stores in the U.K. in June. Cheston said the company would not discuss Jewells as part of the day’s results due to its strategic “startup” nature, and instead referenced “underlying” financial metrics excluding Jewells to aid comparability with prior periods.
Group CFO Chris Lauder reported an underlying gross profit of AUD 412.9 million at an underlying gross margin of 82.9%, an increase of 50 basis points from the prior half-year. Lauder said the margin performance reflected tight management of supplier cost prices and promotions, a focus on maintaining healthy inventory, and improved shrinkage performance. He added that the company was pleased to have maintained a “clean” inventory position.
On profitability, Lovisa reported:
- Underlying EBIT of AUD 109.1 million, up 20.4%
- Underlying NPAT of AUD 69.6 million, up 21.5%
Lauder noted higher interest expense and increased depreciation on store leases, which he attributed to the ramp-up in new store openings over the past year. After accounting for the investment in Jewells, recorded NPAT was AUD 58.4 million.
Cash flow highlighted; interim dividend raised
Cash generation was another focus of the call. Lauder said cash from operations before interest and tax was AUD 183.8 million for the half, up 30.3%, reflecting “tight management” of working capital. Cash capital expenditure totaled AUD 31.7 million, primarily for new store fit-outs, refurbishments, and technology investment.
The balance sheet was described as strong, with “significant liquidity available to fund growth.” The board declared an interim dividend of AUD 0.53 per share, up AUD 0.03 on the prior year, with Lauder stating it represented a distribution of 100% of earnings. He said the board would continue to assess dividend levels at each period end based on profitability, cash flows, and future growth capital expenditure requirements in prevailing economic conditions.
Store rollout and format upgrades; Series Five concept expands
Cheston reiterated that store rollout remains the key driver of future growth. He said Europe delivered the largest share of new stores in the half, with 39 openings, while the Americas added 18 stores as the company continued building out the U.S. and Canada. Lovisa also opened two new franchise markets in Ghana and Reunion.
The company is also rolling out a new store fit-out concept, “Series Five,” designed to provide a more refined look and incorporate features such as digital screens and a new piercing studio store-in-store concept. In response to a question about capital spending, Lauder said early-stage rollout of a new store concept can be more expensive, but added the company does not expect a dramatic step-up in overall capex and typically refits stores around lease renewal timelines.
Trading update, regional commentary, and key Q&A themes
For the first seven weeks of the second half, management said total sales were up 21.5% year over year, with comparable store sales up 1.6%.
In Q&A, executives discussed several operational and market factors:
- Americas performance: Cheston attributed stronger sales per store in the Americas to a “buoyant consumer” and improved execution and store standards, saying it was not driven by tariffs.
- Holiday-period comp volatility: Asked about a slowdown in comps late in the half, Cheston cited “unprecedented weather issues” in parts of the U.S. and Europe, and timing differences in Chinese New Year versus last year, while emphasizing continued focus on product and retail execution.
- Australia/New Zealand revenue per store: Cheston said store closures for refurbishment and Series Five refits likely contributed to lower revenue per store in ANZ, noting more capital deployment in the mature local fleet. He said the company had made changes to teams and product lineup, with new product “hitting stores now.”
- Claire’s closures: Management said it views Claire’s as a market-share opportunity, particularly due to overlap in piercing, but emphasized it is being selective on sites and rents. Executives said some Claire’s U.S. stores were “being saved,” and noted the U.K. administration update was recent.
- Jewells investment: Executives framed Jewells as a “modest investment” intended to test the potential for a second global brand. They declined to provide forward guidance on losses and said early losses in the six months ended June 2025 were “pretty insignificant” because trading only began in mid-June.
- Currency: Lauder said sourcing and translation impacts tend to move in opposite directions, with a growing portion of revenue and profit denominated in U.S. dollars providing a natural hedge, while declining to quantify expectations for the second half.
- Boycott petition: In response to an investor question, Mark McInnes said management did not believe an online boycott petition had impacted the business.
Cheston closed by thanking Lovisa’s global workforce of more than 7,000 employees and reiterated management’s confidence in continued store rollout momentum in the second half and beyond.
About Lovisa (ASX:LOV)
Lovisa Holdings Limited engages in the retail sale of fashion jewelry and accessories. It designs, develops, sources, and merchandises fashion jewelry and accessories under the Lovisa brand name. It operated its stores in Australia, New Zealand, Singapore, Malaysia, Hong Kong, Taiwan, South Africa, Botswana, Namibia, the United Arab Emirates, the United Kingdom, France, Luxembourg, Belgium, Germany, the Netherlands, Austria, Switzerland, the United States, Poland, Italy, Hungary, Romania, Canada, Mexico, Spain, South America, and the Middle East.
