Lovisa Holdings boosts revenue 17.6% with 160 new stores and higher dividends

Robust Growth Driven by Global Expansion

Lovisa Holdings Limited (ASX:LOV) delivered a strong financial year ending 28 June 2026, with total revenue climbing 17.6% to A$938.8 million, powered by aggressive store rollouts and solid comparable sales growth. The company expanded its global footprint by opening 160 new stores, pushing the total to 1,136 across more than 50 markets. This expansion was particularly notable in Europe and the Americas, where sales surged nearly 30% each.

Global comparable store sales grew 2.0% for FY26, with the first eight weeks of FY27 showing further momentum at 3.0%, underscoring the ongoing strength of Lovisa’s retail execution and brand appeal. The company’s focus on prime retail locations and a consistent store format facilitated rapid rollouts, especially in Europe where 76 new stores opened, including 34 in the UK and 20 in Germany.

Margin Expansion and Earnings Growth

Lovisa's gross margin improved by 60 basis points to 82.6%, marking a 270 basis point gain since FY23, driven by sourcing efficiencies and promotional discipline. Gross profit rose 18.4% to A$775.3 million. Earnings before interest and tax (EBIT) increased 14.1% to A$158.2 million, while net profit after tax (NPAT) grew 10.7% to A$95.6 million.

The company invested in technology, supply chain, and retail operations to support its expanding store network and the ongoing trial of the Jewells brand in the UK. Depreciation and interest expenses rose in line with the increased store count and associated lease liabilities.

Cash Flow and Dividend Policy

Operating cash flow before interest and tax grew 21.0% to A$294.5 million, fully funding new store openings and refurbishments without the need for external capital. Capital expenditure of A$58.5 million primarily supported 148 new company-owned stores and store upgrades.

Reflecting strong cash generation, Lovisa declared a final dividend of 33 cents per share, 50% franked, payable on 15 October 2026. This brings full year dividends to 86 cents per share, an 11.7% increase over FY25, representing a 100% payout of NPAT.

Executive Remuneration and Incentive Outcomes

Lovisa’s executive remuneration structure includes fixed salaries and performance-linked incentives tied to EBIT growth targets. For FY26, EBIT growth of 14.1% fell short of the 18.5% threshold required for short-term and long-term incentive vesting, resulting in no STI or LTI payouts for the Global CEO and CFO. This outcome reflects the company’s rigorous performance benchmarks despite solid underlying growth.

Climate Risk Assessment and Sustainability Reporting

In its inaugural Sustainability Report, Lovisa assessed climate-related risks and opportunities across its global operations and supply chain. The company identified physical risks such as extreme weather events and transition risks related to decarbonisation impacts on costs. No material financial impact was identified for FY26, but management acknowledged inherent uncertainties in long-term projections.

Lovisa disclosed Scope 1 and Scope 2 greenhouse gas emissions totaling 6,753 tonnes CO2-e, primarily from refrigeration leaks and purchased electricity. The company has not yet set formal climate targets but has embedded climate risk governance within its existing enterprise risk framework.

Legal and Operational Risks

Lovisa continues to defend a representative class action alleging underpayments under enterprise agreements in Australia. The financial impact remains uncertain, and no provision has been recognised.

Operationally, the company closed 43 underperforming stores and relocated 12 others during FY26, reflecting its focus on profitability and network optimisation.

What to Watch Next

Lovisa’s growth hinges on its ability to sustain global store rollouts and comparable sales momentum amid evolving consumer trends and competitive pressures. The company's cautious approach to executive incentives underscores the importance of meeting ambitious EBIT targets. Meanwhile, climate risk management and potential litigation outcomes remain key variables to monitor as Lovisa navigates its next phase of expansion.