Nothing short of remarkable, says Mogans. Sales growth of 21.5% for Lovisa Holdings, an accelerated store rollout and increased margins led to a 59% jump in earnings — 20% above the broker’s forecast.
A gross margin that goes up when all around are suffering from supply constraints and cost pressures was not something the broker expected, although some crafty forex hedging very much helped.
Lovisa may just prove to be one of the biggest success stories in Australian retail, Morgans suggests. With ambitious new leadership in place, the broker believes now is the time Lovisa steps up to become a global force.
Investment will be needed to expand the network in the US and Europe and to take it into new markets, but the returns could be “stellar”. Add retained, target rises to $24.00 from $22.24.
Target price is $24.00.Current Price is $18.50. Difference: $5.50 – (brackets indicate current price is over target). If LOV meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges – negative figures indicate an expected loss).