Lovisa reported FY26 EBIT of $158 million, up 14%. Sales grew 18% in FY26 with second half sales up 12%. Gross margin at 82.6% improved 60bp. We lower our sales forecasts on lower store numbers but improved comparable sales, with comp sales for the first eight weeks up 3%. We lift gross margin and lower costs. While there is a strong pipeline of store openings, the store network will need to be optimised further and competitive threats are increasing.

Lovisa reported FY25 EBIT of $139 million, up 8%. Gross margins improved 100bp, to 82.0%. The trading update of 5.6% comparable sales growth was an acceleration on the strong 2H25. We lift our sales and gross margin forecasts but also our cost assumptions given 27% cost growth in 2H25.

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.