Lovisa shares dive as UBS flags slowdown in store openings
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The news: Shares in Lovisa took a hit on the ASX after UBS downgraded its rating on the jewellery retailer to 'sell'.
The numbers: Lovisa shares were down 9.13% to $27.16 by 12:07pm AEDT, having advanced nearly 20% over the last 12 months.
UBS reduced its rating on the stock from 'neutral' to 'sell' and trimmed its target price from $29 to $27 per share. Its earnings estimates also reduced by 5.2% in FY25 and 6% in FY25.
UBS analysts said the pace of Lovisa's new store growth has "remained subdued" during the first half of the financial year, with net new stores during the period totalling 27 compared to 98 in FY24 and 173 in FY23.
The context: The analysts believe operational issues and "unattractive rental economics" have slowed the pace of new store openings, noting that Lovisa's FY23 total is "increasingly looking like an aberration".
Like-for-like sales growth has also been subdued, the analysts said, with increasing competition concerns from rival brand Harli + Harpa, founded by Lovisa's former chief executive Shane Fallscheer.
The source: UBS research
