Lovisa reported its results for the first half of FY22, showing robust growth across all operating metrics. Shares finished Thursday’s session 6% higher, bucking the general market selloff.
CEO Victor Herrero said the results were achieved despite ongoing challenges and global disruption from COVID, including lockdowns across NSW, Victoria and New Zealand which impacted sales in the first quarter of the financial year. Comparable store sales momentum was able sot swiftly recover with economies reopening and business conditions improving.
For the half, revenue was $217.8 million, up 48.3%, with momentum continuing into the first weeks on trading in 2022. Comparable store sales were up 21.5% on pcp and 42 new stores were opened during the period, bringing total stores to 586 at the half years end.
Gross Profit jumped over 50% to $170.7 million on a gross margin of 78.3%. Although strong, margins were hit by continued higher freight costs, somewhat offset by favourable exchange rates compared to last year. As a result of increasing expenses on logistics, Cost of Doing Business (CODB) was higher, coupled with inflationary pressures.
Strong cash flow and a healthy balance sheet allowed the board to declare an interim dividend of 37 cents per share. No specific dividend payout ratio was announced moving forward, with management saying they will monitor cash flows, profitability and further growth capex requirements to determine an appropriate payout.
Trading Update and Outlook
The performance in the first half appears to of continued into the second half. In the first eight weeks of trading, total sales are up 61.7% on the same period in FY21. Cost pressures are expected to continue, but strong margins and sales growth should continue to drive profitability.
As a result of ongoing uncertainty in the global economic environment, the board did not provide any further outlook for Lovisa over the course of the year.