The Share Price of Lovisa Soared After The 1H FY2019 Results.


Lovisa Holdings Limited (ASX: LOV), an international specialist fast fashion jewellery retailer company from the Consumer Discretionary sector, has announced the half-yearly results for the period ended 31 December 2018.

During the period, the company reported an increase in the revenue by 12.3% to $133.2 million. The gross margin got lifted to 81%, where gross profit by the end of the period was $107.8 million, up by 13% as compared to the previous corresponding period. The EBIT increased by 5.1% to $36.5 million. The comparable store sales were down by 1.8%. During the first half of the year, around 40 new stores opened and 366 at the half-year end. The company during the period made a profit of $25.5 million which increased by 2.7% as compared to the prior corresponding period. The EPS was up by 0.5 cents to 24.2 cents. The company declared a final dividend of 18 cents per share. The balance sheet of the company remained strong with cash conversion of 121% and operating cash flow of $49.1 million. 

The increase in the revenue was driven by strong growth in the store numbers with comparable store sales down by 1.8% as a result of difficult conditions in the Australian market and cycling strong comp sales from the prior year. The company did not notice a strong fashion trend during the first half of FY2019.

In Australia / NZ, there was an increase in sales growth by 1.9%. The sales got impacted by the softer trading conditions and strong prior half year performance.

In Asia, the sales got impacted by the closure of 4 stores in Singapore which was offset by continued growth in the Malaysian market. The revenue during the first half of FY2019 from Asia was $18.233 million, up by 5.6% as compared to the previous corresponding period.

In Africa, the sales growth was up by 10.5% on pcp. The region continued to perform well during the period with both its existing and new stores. The region reported a sales revenue of $17.683 million.

Europe and US sales growth was driven by an increase of 12 stores in the UK, five stores in France, three stores in Spain, and 7 in the US. USA reported a sales revenue of $1.414 million and Europe reported a sales revenue $17.089 million.

During the period, the company reported a strong balance sheet with significant capacity available to fund growth. The company’s net asset base by the end of the period was $57.777 million. The net asset increased as a result of an increase in the total asset.

The cash flow from the operating activities got lifted by 9.4% to $49.1 million supported by operating cash conversion at 121%. The primary source of cash inflow was in the form of cash receipt from the customers, interest received. At the same time, the company also paid to the suppliers and employees and the interest. As a result, the net cash inflow through the operating activities was $36.881 million.

During the period, the company acquired certain fixed assets. As a result, the net cash used in investing activities was $12.479 million.

The net cash used in the financing activities was $13.514 million. By the end of the period, LOV reported net cash and cash equivalent worth $32.284 million.

In the last six months, the stock has generated a negative return of 15.91%. By the end of the trading session on 20 February 2019, the closing price of the stock was $9.3, up by 20.155% as compared to the previous trading day’s closing price. Today, the stock is trading at $9.905, up by 6.51% (As at 1:12 PM AEST, 21 February 2019) with a market capitalization of $981.76 million and approximately 105.57 million outstanding shares.


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