The Lovisa Holdings Ltd (ASX: LOV) share price is falling on Monday morning.
At the time of writing, the fashion jewellery retailer's shares are down 2% to $28.71.
This follows the release of its half year results.
Lovisa share price falls on half year results
- Revenue up 8.8% to $405.9 million
- EBIT up 10.7% to $90.2 million
- Net profit after tax up 6.5% to $56.9 million
- Interim dividend flat at 50 cents per share
What happened during the first half?
For the six months ended 31 December, Lovisa reported an 8.8% increase in revenue to $405.9 million. This reflects the continued growth in its store network and a very modest 0.1% increase in comparable store sales over the prior corresponding period.
The company opened 57 new stores during the period, taking its store network to 943 stores globally across 49 markets. This includes the opening of its first franchise stores in Ivory Coast, Republic of Congo, and Panama during the period.
Management advised that it has continued to focus on pricing and promotion management, which has driven gross margin expansion during the half. This led to its gross margin lifting 170 basis points to 82.4%, which underpinned an 11.1% lift in gross profit to $334.7 million.
Lovisa continued to invest in its team structures and technology to support the growing global business and its focus on operational execution. Combined with increased spend on its digital marketing and events execution, inflationary pressures, and increased mix of stores in higher cost markets, this has resulted in higher cost of doing business for the period.
As a result of this and a higher tax rate, the company's net profit after tax lifted at a slower rate of 6.5% to $56.9 million.
The Lovisa board elected to maintain its interim dividend at 50 cents per share.
Commenting on the result, the company's outgoing CEO, Victor Herrero, said:
Lovisa has once again been able to deliver solid sales and profit growth, with the highlight another outstanding Gross Margin performance, and the store rollout accelerating in Q2. I want to again share my appreciation to the global Lovisa team for their hard work to be able to achieve these solid results.
Outlook
Lovisa revealed that trading for the first 7 weeks of the second half of FY 2025 has seen comparable store sales increase 3.7%.
This has led to total sales for this period increasing 12.9% over the prior corresponding period.
In addition, management advised that since the end of the half, the company has opened 16 new stores with two closures and one relocation. This brings the total store count to 956.
It also expects to open its 50th market globally in the coming week with its first store in Zambia set to open. But it won't stop there. Management advised that its "continue[s] to focus on opportunities for expanding both our physical and digital store network, with structures in place to drive this growth in existing and new markets and expect store rollout momentum to continue."
