Lovisa FY24 Earnings Call Highlights

Lovisa (ASX: LOV) shares fell as much as 17.5% on Tuesday after its FY24 earnings missed analyst expectations. Here are the key numbers and insights from management you need to know.

FY24 Earnings Summary

• Revenue up 17.1% to $698.7m

• Gross profit up 18.7% to $565.8m

• EBIT up 21.2% to $128.2m

• NPAT up 20.9% to $82.4m

• Final dividend of 37 cents per share

• Trading update: The first 8 weeks of FY25 saw comparable store sales up 2.0%, total sales up 1.7%

Macquarie (as at Jun-24) was expecting FY24 revenue of $716 million, EBIT of $133 million and NPAT of $84 million.

Earnings Call Highlights

The below topics have all been answered by CEO Victor Herrero and CFO Chris Lauder.

Gross margin performance: "... 81% gross margin, up on last year by 110 basis points ... This outcome was achieved on top of the 100 basis points of gross margin expansion delivered in FY23 and built on the 40 basis point improvement we saw in the first half of FY24."

State of the Australian market: "The Australasian regions continue to be the most challenging market and opportunity for improvement."

Growth trends: "Growth was particularly strong in the European and Americas market with those regions providing the majority of the new store growth."

New store rollouts: Our store rollout continues through the year. We opened 128 new stores in the period, taking the store network to 900 stores at year-end ... Recently, we were able to open a further seven new markets during the year, including Mainland China, Vietnam, and Ireland."

International expansion plans: "Pleasantly, we are able to deliver our first new stores in a strategically important Asian market of Mainland China ... We are now live on key Chinese online marketplaces, Tmall, Douyin, Little Red Book, WeChat, and JD.com as a part of our strategy to build our presence in the market."

Analyst Q&A Highlights

On gross margin expansion: "So, majority of it was price. So, definitely we through price increases through the second half just as we did in the first half and in prior years."

China strategy: "We are analyzing opening stores, but also I think that the e-commerce is having a present on e-commerce in China as well is very important."

US store growth: "We opened a lot of stores in the US in a real hurry and we spread them across a pretty wide geography as Victor just said, over 40 states."

Gross margin outlook: "We're not giving any guidance on gross margin for FY25."

Price impact on volume: "There's nothing telling us that the pricing power is not there."

On cost base: "We're not about delivering leverage. We're about investing in the business so that we can continue to grow."

On lease renewals: "Obviously, the top malls still extremely difficult and hard to negotiate with, as you'd expect."

Store rollout in the US: "There’s no capacity constraint internally to be able to open stores. It's a matter of getting the right deals at the right time."

US market challenges: "The difference between the US and other markets is the cost of building stores that is higher than other places."

This article was generated with the support of AI and reviewed by an editor.