Global rollout helps Lovisa lift H1 profit

The acceleration of Lovisa's rollout across Europe and the US has helped the jewellery chain lift its first half profit, though it has warned of an impending coronavirus hit.

The retailer lifted its net profit for the six months to December 31 by 4.5 per cent to $26.7 million, with global revenue jumping 22.2 per cent to $162.8 million on the opening of another another 21 stores in the US, 10 in France, and four in the UK.

The total Lovisa network across the world is now at 439 stores.

However, the company said sales have softened since the new year following publicity surrounding the coronavirus outbreak.

Store traffic has significantly slowed, it said, with second half comparable store sales down by 0.7 per cent so far from first half growth of 2.1 per cent.

It has also ben hurt by supply chain delays.

"With the majority of our product originating from China we are feeling the impact of the ongoing containment efforts being undertaken by the Chinese government to combat Coronavirus," Lovisa said on Wednesday.

The company said delays has struck the warehouse that replenishes its northern hemisphere and South African market and was only now ramping back up to capacity after the extended Chinese New Year break.

Lovisa expects to see further impacts on sales over coming months, however it said the size of any impact cannot currently be reliably estimated and is heavily dependent on the length of time of the current disruptions in China.

Despite the mixed outlook, Wednesday's first half result reflected a pleasing sales performance for the firm.

The company's major Australia-NZ division - which comprises of 188 stores - experienced revenue growth of 6.2 per cent to $82.8 million, helped by strong online sales.

Lovisa's 62-store South African revenue rose 15.9 per cent to $20.5 million, but sales in Asia slipped 3.6 per cent to $17.6 million on store closures in Singapore.

Sales in the US, however, increased more than sevenfold to $12.27 million, while European sales in Europe jumped by two thirds to $28.51 million.

The company cut its interim dividend by 3.0 cents to 15 cents per share, fully franked, reflective of the higher dividend payout ratio applied in prior year to distribute surplus cash to shareholders.

Lovisa stocks were up 0.73 per cent, or 8.0 cents, to $11.06 by 1403 AEDT.

That's a slide of 21 per cent from an historic high of $14.13 in October.