Jewellery sales shine bright as Australians keep shopping

Brett Blundy-chaired jewellery retailer Lovisa is the latest business to reveal robust consumer spending, with revenue up by close to 60 per cent for 2022 as shoppers across the world splashed out on accessories.

The fast fashion brand’s boss Victor Herrero told analysts on a call on Monday that Lovisa’s product offering was resonating with consumers during a period of wobbly consumer confidence.

“At this moment, we are very happy with the product offering we have on a global basis. It is something that is capturing the attention of existing markets and new markets,” he said.

Lovisa offers jewellery at a lower price point for consumers.Credit: Bloomberg

Analysts had been waiting for Lovisa’s results as an indicator of the strength of consumer spending, given the stock had been affected by lockdowns across the world over the past year. The stock had been sold down in the first half of 2022.

But the company’s numbers surprised on Monday, with net profit after tax up 116.3 per cent to $59.9 million.

Revenue was up 59.3 per cent to $458.7 million, and while the costs of doing business increased in the face of inflationary pressures, Lovisa was able to keep costs at 58 per cent of sales, below what it was in 2020.

Herrero said sales momentum had stayed strong in the first weeks of the new financial year, up 66.1 per cent on the same time last year.

Lovisa’s growth strategy involves expanding its bricks-and-mortar store network right across the world, and the business now has 629 stores.

Herrero said the company managed to open a net 85 new stores throughout 2022, and had worked hard to find efficiencies in spite of rising costs and construction delays in a range of markets.

Shares jumped 6.2 per cent higher on the back of the results closing at $19.82.

Lovisa was not the only ASX-listed jewellery retailer pointing to strong consumer sentiment.

The latest lockdowns have had a noticeable impact on jewellery sales.

Michael Hill also surged at the open, up 9.3 per cent to $1.12 after the business reported a 13.9 per cent jump in profit to $46.7 million. Its shares closed at $1.06.

The company, which has undergone an extensive strategic overhaul including the shuttering of underperforming stores, saw sales up 13.4 per cent for the first weeks of 2023. Sales were up 18.5 per cent overall, but the same period last year was impacted by retail lockdowns.

Chief executive Daniel Bracken told The Sydney Morning Herald and The Age that while the business had been classed as a discretionary retailer in the past, many of the purchases that consumers made with the brand were not optional.

“You can’t propose to your loved one without an engagement ring, whereas you can go out to a party without a new dress,” he said.

While bricks-and-mortar sales were booming, online cosmetics retailer Adore Beauty released earnings on Monday that suggested e-commerce sales were slowing.

Adore revealed on Monday that trading in the first seven weeks of the new financial year was down 28 per cent on this time last year.

The business reported an 11 per cent jump in revenues for 2022 to $200 million, but warned conditions were challenging.

Outgoing chief executive Tennealle O’Shannessey said that despite tough trading conditions, Adore’s product range was unmatched by any other local retailer and the business had a strong cohort of premium beauty customers.

“They very much view it [beauty products] as an essential,” she said.

Adore Beauty shares slipped as low as 15.7 per cent Monday’s session. They closed at $1.64.

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