Lovisa misses profit forecasts amid aggressive expansion

The jewellery and accessories retailer is paying a price for its aggressive global expansion, missing profit forecasts, but it isn’t stopping its store rollout and has announced Zambia as its 50th market.

Lovisa will soon open its maiden store in Zambia, Africa, marking its 50th country.

Lovisa, the jewellery chain controlled by billionaire Brett Blundy, has severely undershot analyst expectations for its interim profit and sales, but that’s not dampening its expansion plans as it steams towards almost 1,000 stores globally and announced Zambia as its 50th market.

Shares in Lovisa slid more than 6 per cent on the earnings miss as investors looked beyond its global expansion to worry more about the financial health of its existing stores.

Although Lovisa did manage to ratchet up its margins over the December half, a slowdown in same store sales growth to almost zero and higher costs of doing business in newer markets – as well as the costs of marketing and events to publicise its stores to new customers – has dented its profit growth.

This challenge returning Lovisa to solid profit growth while also rolling out its store network at a breakneck speed will be handed to incoming chief executive John Cheston, the former boss of Solomon Lew’s stationery chain Smiggle, who takes the reins at Lovisa from Victor Herroro at the start of June.

On Monday, the growing pains from its aggressive global expansion were evident. Lovisa posted an 8.8 per cent rise in half-year revenue to $405.93m as profit increased 6.5 per cent to $56.93m, with its global store roll out from Singapore to Italy fuelling its growth. The company kept its dividend flat at 50c per share, payable on April 10.

The retailer opened 57 new stores during the period, to have 943 stores at half-year end, and has named Zambia as its 50th market.

However, its existing stores have struggled to improve sales as same store sales growth spluttered to 0.1 per cent for the half, balanced by a stronger gross margin, up 170 basis points to 82.4 per cent for the half.

The first-half profit was 7 per cent below market consensus forecasts, driven by the same store sales growth slowdown and a higher tax rate, with pre-tax earnings a 2 per cent miss to forecasts. This was countered by a stronger start to the second half as the company provided a trading update that showed same store sales up 3.7 per cent for the first seven weeks of calendar 2025.

“Something for the bulls and bears, but expect stock to be modestly weak initially on the back of potential earnings per share cuts,” said Barrenjoey analyst Aryan Norozi.

Europe sales reflected continued new store growth with 25 new stores opened for the period with store growth accelerating in the Britain and Ireland, the company said. In the Americas region, there was continued store rollout with 11 new stores, with growth primarily in Canada. Asian market remains subdued, as both same store sales and store rollout were below expectations

In Australia and New Zealand sales of $115.15m were up 3 per cent for the half, sales in Asia fell 2.5 per cent to $19.266m, Africa/Middle East sales rose 8 per cent to $31.18m, in Europe sales rose 13.9 per cent to $137m and in the Americas sales lifted 11.7 per cent to $102.155m.

“Lovisa has once again been able to deliver solid sales and profit growth, with the highlight another outstanding gross margin performance, and the store rollout accelerating in the second quarter,” said CEO Mr Herrero.

Shares in Lovisa ended down $1.10 at $28.20.

Originally published as Lovisa misses profit forecasts amid aggressive expansion