Sydney-born jeweller brand Lovisa has reported a 44.8% increase in revenue to $315.5 million in the first half of FY23, citing price increases in Q3 FY22 alongside expansion in new and existing markets for the result.
The brand’s net profit after tax was at $47.7 million, up 31.9%, with a gross margin of 80.3% and a gross profit up 48.4% to $253.2 million.
In response to inflationary pressures, Lovisa implemented price increases during Q3 of FY22, which it said helped deliver strong sales growth through Q4 of FY22 and which continued through H1 FY23, with minimal impact experienced in sales volumes.
All markets continued to grow strongly for the half year, according to the jewellery brand, with Asia in particular recovering well from disrupted sales in prior years.
Alongside the elevated prices, Lovisa opened 86 net new stores across new and existing markets in H1 FY23. Lovisa said this is a key driver for sales growth, and is one more than opened in the whole of FY22, taking the total store network to 715 stores across more than 30 countries.
This included seven new markets opened in the half year in Namibia, Hong Kong, Mexico, Italy, Hungary, Romania and Colombia (franchise), adding to the two new markets opened at the end of FY22 in Poland and Canada.
The USA market was the main driver of store network growth for Lovisa, with 39 new stores opened in the period. Europe saw 27 new stores opened, including eight stores now trading in Poland and four in Italy. The USA is now the company’s largest individual market.
Despite the expected costs in these international expansion initiatives - including the teams, logistics, technology and structures to manage these markets effectively - Lovisa said its CODB remained well controlled, helping mitigate inflationary pressures on labour and other costs.
Its total CODB was up 65% on the prior half year, including a $15 million Long Term Incentive expense associated with the existing CEO LTI package
Capital expenditure for the period was $31.9 million, predominantly from new store fit outs according to Lovisa, up $18 million on prior year as the pace of new store openings increased.
“We are very pleased that we have been able to increase the momentum of our store rollout during the half, which has again delivered us strong top line sales growth, and combined with continued double-digit comparable store sales has resulted in an excellent financial result for the period,” Lovisa CEO Victor Herrero said.
“The company has been able to continue to invest in the structures to support our global expansion ahead of the growth curve while continuing to deliver profit growth, which leaves us well-placed as we move forward with store rollout in both existing and new markets.
“I want to thank the entire global Lovisa team for the amazing work they are doing to deliver these outstanding results.”
Trading for the first seven weeks of the H2 FY23 saw comparable store sales for this period up 12.3% on FY22. Total sales for this period are 24% up on the same period in FY22.
Since the end of the half year, Lovisa opened its first two stores in new franchise market Peru, with the store network currently at 746 including 31 net new stores opened for the second half to date.
Lovisa said it will continue expanding both its physical and digital store network, supported by a conditional approval from its financiers (subject to execution of facility documents) for extension of its existing cash debt facilities for a further three years and increase in the facility limit to $100 million to support future growth in its store network.