Up 66% in a year, the Lovisa share price just hit an all-time high

Shares in this jewellery retailer have hit another breakout high today.

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A young woman wearing a silver bracelet raises her sunglasses in amazement, indicating positive share price movement in jewellery shares.

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The Lovisa Holdings Ltd (ASX: LOV) share price has surged an impressive 66% over the past 12 months, touching a new record high of $34.04 in mid-afternoon trading today.

Shares in the ASX retail stock began to climb in November last year after hitting a 52-week closing low of $17.22 on October 30.

They tracked sideways from January and then broke above the $30 barrier in late February, reaching a prior all-time closing high of $33.22 on 11 April. After peaking at today's all-time record high, the Lovisa share price has retreated slightly to close at $33.91 on Friday.

So, what has driven this remarkable performance, and should you consider adding Lovisa shares to your portfolio?

Why has the Lovisa share price surged 66% in a year?

Lovisa Holdings is a fashion jewellery retailer with a multinational presence in Australia and more than 20 other countries. Founded in 2010, the company now boasts around 860 locations owned by itself and through franchisees.

The company is well-known for its affordable jewellery ranges while still emphasising quality and style.

Lovisa's share price has substantially increased over the last year for two reasons: strong growth in its store network and e-commerce platforms and positive analyst sentiment.

Bell Potter – which has maintained a buy rating on Lovisa shares and upgraded its price target to $36 apiece – said the company's store network was expanding faster in new markets than previously anticipated.

It analysed data from various global markets and projected that Lovisa could grow its store network by 10% annually between FY 2024 and FY 2034.

Additionally, Lovisa has been building momentum on its e-commerce platforms in Australia and the United States compared to its peers. If the company hits these growth numbers, it could contribute to increased earnings and, potentially, market valuation.

Recent financial performance

Lovisa reported its H1 FY 2024 financial results in February. The company grew revenues 18% year over year, leading to an 18.9% increase in gross profit. The gross profit margin also rose by 40 basis points to 80.7%.

Comparable store sales for the same period increased by 0.3% year over year, while total sales rose by 19.6% compared to the previous year.

What's next for the Lovisa share price?

With the Lovisa share price hitting new highs and strong growth prospects ahead, investors are watching closely as the company continues to execute its expansion plans and e-commerce strategy.

Lovisa CEO Victor Herrero said in the H1 FY 2024 results that the company was looking to "move forward with growth in both existing and new markets".

To that point, it had already opened nine new stores in H2 FY 2024, bringing the total network to 860 sites.

Bell Potter's positive outlook underscores confidence in Lovisa's ability to continue growing revenues for the coming decade.

Foolish takeaway

Lovisa shares have surged 66% over the past year, reaching a new 52-week high, driven by robust financial performance and positive analyst sentiment.

For investors seeking growth opportunities in the retail sector, Lovisa could be an appealing investment case, given its strong financial performance and expansion plans.

However, as with any investment decision, it's important to conduct thorough research and consider your own financial goals.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. 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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