Cheap fashion jewellery and accessories retailer.
Lovisa’s product concept of disposable fashion jewellery aimed at teenagers and young adults.
Attempting to emulate the early success of fashion stationery chain Smiggle
When Lovisa was launched it was set up as a vertically integrated retailer. It allows the company to quickly adapt its product range to changing global fashion trends and respond to customers. It's a model common among international retailers such as H&M and Zara.
Lovisa's in-house design team develops the jewellery with orders delivered every six to 10 weeks from a range of overseas suppliers.
Lovisa has around 15,000 pieces of jewellery instore and introduces 100 new designs on a weekly basis
The key success drivers of Lovisa derive from ability to offer on-trend and well priced fast fashion jewellery
Bought with GAP UP on 24 Aug
Portfolio Equity = 100k
Risk = 1%
ATR Multiple = 2
Recommended Quantity = 1,000 shares
Initial Buy = 1,000 shares @ 4.65
BOUGHT @ $4.45 - SOLD @ $4.59 (FEAR!)
07 Sep: BOUGHT BACK @ $.4.65
Strong Financial Health.
- Exceeded consensus forecasts by booking double-digit revenue, earnings and profit increases.
- Revenue increased by 16.5% to $178.7 million for the year ended 30 June.
- Strong top line sales drove a 68% increase in EBIT to $40.7 million and a 75.5% increase in net profit after tax (NPAT) to $29 million.
- Gross margins increased by 78.8% during the year
- Cost of doing business (CODB) as a percentage of sales reduced to 53%
About Right Value based on:
- Future CF (Simply Wall) @ $4.88
- Lincoln Consensus Price Target @ $4.87
- ValueFrog: $5.00 (John Price); $8.00 (Roger Mont); $15.10 (Ben Graham); $10.29 (WB)
- Macquarie’s $5.06 price target for Lovisa over 12 months
Fast-fashion business model