Analysts downgrade fast-fashion jewellery chain Lovisa over concerns about store rollouts

The shine has come off fast-fashion jewellery chain Lovisa as concerns grow that a slower-than-expected store rollout will impact the company’s earnings expectations.

Fast fashion retailer Lovisa shares have been downgraded.

Embattled fast-fashion jewellery chain Lovisa has been downgraded due to concerns over its future earnings because of a slower store rollout – and an analyst says the “risk-reward is no longer compelling”.

The billionaire Brett Blundy-backed company founded in 2010 issued a trading update in late November as data showed it was falling behind market expectations on sales and its new-store expansion.

On Wednesday, UBS analyst Shaun Cousins downgraded the company to a sell due to reduced earnings estimates and trimmed the company’s target price by 6.9 per cent to $27.

Jefferies also downgraded the stock to hold on Tuesday and Lovisa shares closed 10.5 per cent lower to $26.75, its lowest point since February 21 last year.

Mr Cousins said that Lovisa had significant store growth potential as it transitioned to a global fashion brand, which was assisted by a consistent format across markets while leveraging a low ticket price and socialisation by a predominantly youth consumer. “Yet the rate of net new store growth has been modest in recent years and expectations for 1H25 and beyond are too aggressive, while like-for-like sales growth has been subdued,” he said.

Mr Cousins cut his earnings-per-share estimates for the 2025 and 2026 financial years by 5.2 and 6 per cent, respectively, to reflect a less bullish approach to net new store growth and lower like-for-like sales growth.

“Given the downside risk to consensus earnings estimates and reduced valuation support, the risk-reward is no longer compelling,” he said.

According to Visible Alpha data, the UBS EPS estimates were -4.7 per cent and -9.7 per cent below consensus for FY25 and FY26, respectively.

Mr Cousins said Lovisa opened 98 stores in the 2024 financial year but in the first half of 2025 had only 27 net new openings as operational issues and unattractive rental economics reduced the pace from the 173 that were opened in FY23, “which is increasingly looking like an aberration”.

However, in the November trading update Lovisa said global comparable store sales for the first 20 weeks of the 2025 financial year were up 1 per cent compared with the corresponding period in 2023, while total sales were up 10 per cent, benefiting from continued growth in the store network over the past year.

These figures represent less than half of the growth the market had hoped for in the first half of the financial year. Investors had expected 2.5 per cent growth in comparable store sales and 13.2 per cent in total sales.

Lovisa said it operated 927 stores in 49 countries. Franchise markets opened this year in Ivory Coast, Republic of Congo and Panama.

UBS noted the increase in competition from start-ups like jewellery brand Harli + Harpa, which was launched in October last year by former Lovisa chief executive Shane Fallscheer, who left in 2021 after being with the company for more than 12 years.

Marketed as “Your walk-in jewellery box”, Harli + Harpa has opened 18 stores since November.

This week Harli + Harpa former chief executive Cass Fuller launched legal action against the company, claiming lost wages and super after she was allegedly sacked after only a few months on the job.

Originally published as Analysts downgrade fast-fashion jewellery chain Lovisa over concerns about store rollouts