The collapse of a cheap jewellery chain in the United States could prove advantageous to Australian low-price jeweller Lovisa, according to a note to investors from investment bank Citi.
Claire’s is a low-price jewellery and accessories retailer with prices similar to that of Lovisa. The U.S. retailer filed for bankruptcy in the United States in early August 2025, flagging macroeconomic and retail-specific market pressures, including reduced foot traffic, high interest rates, inflation, tariffs, heightened promotional environment, and a disparity between inventory and customer demand.
On top of this, the BBC reported that Claire’s collapsed into administration in the U.K. and Ireland, were it has 306 combined stores.
Overall, Claire’s operates more than 2,750 stores in 17 countries throughout North America and Europe, as well as 190 ICING stores. Similar in pricing, ICING was acquired by Claire’s in 1996.
The investor note by Citi also noted that Claire’s sells its products in thousands of concession locations in North America and Europe. It also has more than 300 franchised stores, located primarily in the Middle East and South Africa.
In the US, the collapsed company has reportedly identified 291 stores to close, which would leave it with around 800 stores in operation.
“Ames Watson, a Columbia, Maryland-based investment firm, plans to keep the chain alive by purchasing no less than 795 and potentially up to 950 of Claire's stores, as well as its intellectual property rights,” Citi analysts noted. “Ames Watson is paying $104 million in cash plus a $36 million seller note in the deal (CoStar 27 Aug 25).
“It is unclear what the future is for the 207 stores in Walmart USA.”
Alongside a likely boost in market share for Lovisa, Citi analysts believe the store closures could also offer opportunity for the Australian low-price jeweller to snap up prime locations.
“While all the closing locations are unlikely to be suitable for Lovisa, some may be, and we see the closure of a competitor to be positive for Lovisa’s market share,” Citi noted.
The Claire’s development adds to a raft of reasons why Citi analysts, alongside other analysts at Canaccord Genuity, are a bit more relaxed on Lovisa’s trajectory.
Citi has changed its stance on Lovisa stock from Sell to Neutral, upping its 12-month target price to $42.50. Lovisa’s share price currently sits at $40.93 (September 4, 3:00pm), which is up 20 per cent compared to a month ago. Lovisa saw a jump up in its stock price in late August following its full-year trading update.
Canaccord is a little more restrained, setting a target price of $37.60, with that up from its recent target price of $28.70.
All of them see an accelerated store rollout for Lovisa, and a boost in comp sales.
This comes after Lovisa reported a 14.2 per cent lift in total revenue for FY25, hitting $798.1 million, with Brett Blundy’s new Jewells retail concept in the United Kingdom adding to the boom.
The company’s gross margin also shot up by 100 basis points to 82 per cent, with gross profit growing by 15.7 per cent for the full year compared to the previous.
Comparable store sales, however, lifted by just 1.7 per cent.
“While we acknowledge increasing risks from emerging competition in ANZ, these are being well and truly offset by growth in the rest of the world, which may see another leg up from the situation at Claire’s,” Citi analysts noted.
“While costs have surprised on the upside, there are likely one-off costs in FY25 that relate to Jewells, and investors are likely to look through higher CODB when the network is expanding so rapidly.”
Canaccord Genuity analysts dug a little deeper, spotlighting the uplift in gross margin as a standout feature of Lovisa’s results. The analysts at Canaccord noted that Lovisa added $202 million of revenue over FY24/25 for incremental cost of goods sold (COGS) of $24 million.
“Put another way, COGS/average store is 12 per cent lower than it was two-years ago,” Canaccord analysts noted. “On the flip side, CODB has stepped sharply higher, especially so for 2H25. We acknowledge much of this is proactive investment into infrastructure/systems/processes to shore up the global platform.”
However, Canaccord did spot a dampener on Lovisa’s EBIT margin, which is down by 120 basis points. But they added that improving comp store sales and a healthy new store roll-out profile were comforting to see and “anchors at least a mid- to high-teens FY26E revenue growth profile.”
“As has been the case for a while, we can find arguments for being both bearish/bullish but admit our caution stems back to valuation concerns as opposed to any structural concerns with the business model,” Canaccord concluded.
Canaccord analysts also pointed a finger at an uptick in “Other” costs at Lovisa, which hit $94.5 million, up 39 per cent. This was principally attributed to marketing investments and set-up costs of Jewells.
The analysts estimate that Jewells set-up costs could be upwards of $10 million, which they understand investors may choose to strip this cost out.
“Nonetheless, the cost base has ostensibly increased even with the LTI expense reducing from $11.9 million to $2.1 million.”
On top of that, Canaccord thinks Lovisa could double its current store footprint in the longer-term, but they note timing is relatively hard to pinpoint “given recent experience”.
In mid-August, Lovisa had 1,041 stores, which includes 162 new stores in FY25 and 16 more in the first eight weeks of FY26.
“Store growth in recent months looks to have been tilted towards Europe and North America (Canada specifically),” Canaccord analysts added. “Franchise stores are expected to continue to play a role in establishing presence in emerging markets.”
The analysts added that Lovisa management has intimated that its net store growth in FY26 should be at a broadly similar overall pace as FY25, with US rollout pace expected to pick up.