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Why the Lovisa share price is now down 50% in 6 months

The Lovisa Holdings Ltd (ASX: LOV) share price has now collapsed in half since last August from above $12 to just $5.67 as investors exit the cut-price jewellery retailer on the back of a weaker-than-expected trading update and poor sentiment over the retail sector in general.

At its recent AGM Lovisa’s management told investors that same-store sales for the financial year to date were down 0.9%, which is way off the strong rates of comparable growth investors in the business had grown used to.

The group is still working on an aggressive Australian and global expansion strategy via new store openings, with it expecting to have at least 360 stores trading by Christmas.

In FY 2018 Lovisa gres same-store sales 6.8% to deliver a net profit up 24% to $36 million. It also paid 14 cents per share in dividends to place it on a trailing yield of 2.5% plus full franking credits.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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