Shares in Lovisa have tumbled nearly 20 per cent after the jewellery retailer said its same-store sales growth so far in the current financial year had turned negative.
Chief executive Shane Fallscheer told shareholders on Tuesday comparative sales for the year-to-date were down 0.9 per cent, far lower than the long term target of 3-5 per cent increase.
He attributed some of the blame on strong comparative sales growth over the past few years, saying ‘as a result, comparative sales in the current year will be more challenging as we cycle these strong numbers.’
By 1225 AEDT, Lovisa shares were still down 18.2 per cent at $6.87 in a weak Australian market.
While the company remained upbeat on its international expansion plans, it indicated there was pressure in the domestic market as consumers reduce spending.
‘In Australia, households are affected by rising power prices, low wage growth, rising mortgage rates and deflating property prices in most major cities. Uncertainty abounds,’ Chairman Michael Kay told shareholders at the company’s annual general meeting.
Despite this, the overall result for 2018/19 will depend on its performance in the period leading into Christmas, he said, adding that the management team remains acutely focused on ensuring that strong gross margins and well-managed costs.
Lovisa is also focusing on reducing the disproportionate reliance on Australian sales as its international expansion gathers pace, Mr Kay, who is stepping down, said.
On Monday, online retailer Kogan flagged declining first-quarter margins because of a weaker Australian dollar, while furniture retailer Nick Scali and The Reject Shop also flagged competitive pressure earlier this month.