Jewellery retailer Lovisa posts £1m loss for UK stores

Lovisa UK directors warn the spread of the pandemic will hurt its performance into the new financial year.

Jewellery retailer Lovisa has posted more than a £1m loss from its British store.

Jewellery retailer Lovisa has posted more than a £1m ($1.8m) loss from its British stores, of which around half are closed due to the aggressive strain of Covid-19 in the country, with the company warning it expects a continued earnings impact from the pandemic for its 2021 results.

Lovisa has lodged its latest financial accounts with the British corporate regulator for its local operations with its sales for fiscal 2019 growing strongly, up to £15.97m from £10m in 2018.

The chain did post an operating loss of £1.255m for the period, although it was down from the loss of £1.59m in 2018. The latest accounts lodged in Britain are for the year to June 30 and do not cover the worsening pandemic and trading environment in Britain from the middle of the year, which recently escalated to see mass shutdowns and lockdowns across England, Scotland and Wales. Lovisa has around 42 stores in Britain.

In the latest financial report, Lovisa UK directors warn the spread of the pandemic will hurt its performance into the new financial year.

“Subsequent to the end of the financial year and prior to the date of this report, the COVID-19 pandemic took hold. The company’s results for the year ended June 28, 2020, were negatively impacted following the disruption to the business through the second half of the financial year (January-June 2020) due to government restrictions implemented in response to COVID-19,” the Lovisa UK directors report says.

“The company’s 40 stores in England and Wales were closed from March 23 until reopening on June 15, 2020, and the two stores in Scotland were closed from March 23 until reopening on July 13 in the new financial year.

“The company’s results for fiscal 2021 continue to be negatively impacted and to date three stores had short-term closure periods in response to local COVID-19 exposure and all 42 stores across the UK were temporarily closed during a UK government-directed lockdown phase from midnight November 5 until December 2.”

However, striking a positive note in the accounts, the directors of Lovisa UK note that in terms of Brexit and the impact to its business they believe the retailer could successfully navigate the storm triggered by protracted Brexit trade and economic negotiations given the nature of the Lovisa business and its price points.

“There is reasonable expectation that the economy of the UK may be adversely impacted, which could impact the company’s performance given our products are ‘discretionary’ and not ‘necessities’. Given the company’s competitive price point and experience of similar downturns in economic conditions in other territories the Lovisa brand operates in, we believe the business is well placed to manage through whatever economic conditions prevail.”

The report said Lovisa UK continued to monitor the potential impact of changes in the UK’s border and custom regulations and is working closely with its freight providers to ensure alternative supply chain options in case of delays at ports as a result of Brexit.

Earlier this month, Lovisa announced the acquisition of the European retail network of German wholesaler Beeline across six European countries as well as a put option to buy the 30 network Beeline stores in France. That put option was later triggered with Lovisa picking up the business.