Lovisa reported 1H25 EBIT of $90 million, up 11%, slightly below consensus estimates of $92 million. With revenue growth stunted by flat comparable sales, gross margin was the standout, hitting a record 82.4% (up 170bp). The trading update signaled an improvement in trading momentum with LFL at 3.7% and the company is confident that the store rollout will reaccelerate. Cost growth gives us pause. Gross margins need to be maintained to offset cost growth if comparable sales don’t deliver, which is difficult with increasing competition. Given the lack of traction in Asia, we have removed the probability of an accelerated China rollout.