One of the biggest movers in morning trade has been the Lovisa Holdings Ltd (ASX: LOV) share price. Its shares are up 10% to $3.85 today thanks to the release of a positive update from the fashion accessory retailer.
The release revealed that trading in the second half has remained strong and above management's previous expectations.
Same store sales growth for the March quarter came in at 6.7%, resulting in impressive year-to-date same store sales growth of 10.9%.
In light of this management expects full-year earnings before interest and tax (EBIT) to be materially higher than current broker estimates of $35.5 million.
For the full-year management anticipates EBIT in the range of $38.5 million to $39.5 million. This will mean growth in the region of 59% and 63% on last year's result.
It appears the hard work management has put into cleaning its inventory position has paid off. This has enabled the company to limit sales and markdown activity, while allowing it to enjoy stronger margins.
Furthermore, the company has announced the acquisition of 17 fashion accessory stores in South Africa and the continued store rollout in the United Kingdom. By late August management expects 13 Lovisa stores to be operating in the UK.
Should you invest?
Last year the company was hit hard by the higher cost of sales due to the weakening Australian dollar and a greater number of markdowns.
I must admit to being slightly sceptical on the chances of management turning around its fortunes so quickly, but I am happy to have been proven wrong.
Whilst I'm still not a buyer and would like to see the strong performance sustained for a little longer, I do think it could prove to be one of the better options for investors looking for exposure to the retail industry.
But for now Premier Investments Limited (ASX: PMV) and Noni B Limited (ASX: NBL) continue to be my favourites in the industry.
