Investment banks scrutinising the share price of Lovisa have all eyes on the Australian low-price jeweller’s store rollout, with mixed projections coming to light.
Earlier this week, analysts at Citi reduced its target price expectations of Lovisa’s stock (ASX:LOV) to $22.98, down from its previous projection of $25.86. The jeweller’s share price currently sits at $31.90 at the time of writing (July 24, 9:00am).
They also lowered its FY26e and FY27e NPAT for the jeweller by 14 per cent and 25 per cent, as they reassess sales and cost assumptions.
In a note to investors, the analysts claimed its 11 per cent drop in Lovisa’s target price ultimately arose amid seemingly reduced uncertainty around the near-term rollout of stores.
“We see increasing risk that Lovisa could beat rollout expectations at the upcoming FY25e result, noting our latest analysis of store location data, gathered with the help of Citi’s Research Innovation Lab, suggests there were ~1,039 stores at the end of the period vs VA Consensus at 1,004,” the analysts wrote.
“We think this could support the share price near-term, particularly with a large proportion of store openings in the last two months being in the US, suggesting the issues which paused the rollout may have been largely resolved.
“It is also possible that if the 2H FY25 run rate of store openings is sustainable, then FY26 new store growth of 82 net new stores (assuming a starting base of 1,039 stores) could be 110 stores too low.”
While Citi analysts acknowledged that the share price may rise in the short term, they remain comfortable with their sell rating on the jeweller’s stock. This is due to risks to long-term rollout expectations given “potential operational issues in newer growth markets”.
Their verdict here is reportedly based on extensive store visits, as well as the launch of Jewells – Lovisa chairman Brett Blundy’s newest jewellery retail business – which could suggest the core Lovisa format is more mature than previously thought.
Emerging competition also remains a key risk under Citi analysts’ microscope, with Lovisa founder and former CEO Shane Fallscheer’s new jewellery offering Harli + Harpa now at 34 stores.
“Further, we see a level of strategic uncertainty with the new CEO [John Cheston] having commenced last month, that may not be factored into the stock’s PE multiple.”
But other investor analysts remain relatively excited about Lovisa’s stock, including Morgan Stanley which has upped its target price for the retailer to $35. That’s a lift of $3.50.
In its note to investors on July 9, Morgan Stanley analysts remained bullish on a store rollout that they think appears ahead of expectations, with momentum in the second half, as well as store runway catalysts and optionality in Jewells and China, and positive comps growth.
The analysts' store growth tracker ended FY25e at 992 owned stores, incorporating 985 Lovisa stores and seven for Jewells, which they say is comfortably ahead of VA consensus.
“On a net adds basis, this implies +127 stores (+120 Lovisa and +7 Jewells), vs +104 VA cons,” Morgan Stanley analysts wrote.
Lovisa does manage a handful of franchise locations. By FY24 end, the company reported to have 35 globally, in the Middle East, Africa and South America.
“Store growth accelerated in 2H25 with +88 net new, vs +39 1H25,” Morgan Stanley analysts continued. “2H25 appears to be the largest half of net stores added and acceleration bodes well into FY26e after recent history of relatively 50/50 1H/2H rollout splits.
They also commended Lovisa’s geographical mix, with US, UK and Europe (in aggregate) being stronger, “which likely alleviates some concerns on quality, but Australian store base did see optimisation in 2H25.”
Regarding Blundy’s Jewells concept, Morgan Stanley’s share price expectations is believed to be based on speculation that the new retail business is housed under Lovisa.
While still in early days – seven stores at latest count – any positive initial feedback on the new concept (personalisation, services focus e.g. made-to-fade tattoos, more premium mass market) will be well received into rollout potential,” the analysts wrote.
Analysts also noted a China optionally post second store. Based on their personal observations, the first store was located in a mid-tier shopping centre with a mix towards local brands.
“Store location had good foot traffic and very accessible being situated near the entry/exit to the station/mall,” they wrote. “LOV recently opened their 2nd store (late April), with the location appearing to be in a more premium shopping mall (though not super premium/ luxury).
“We would be looking for any incremental on what's working / not working.”
Lovisa is set to share its FY25 result on August 27.