Why the Lovisa share price is printing 52-week lows

Listed retailers are falling sharply today following Kathmandu's announcement of worse than expected Christmas trade.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The share price of fast-fashion jewellery chain Lovisa Holdings Ltd (ASX: LOV) has fallen 9.6% to a 52-week low of $5.62 during Thursday's trading session. Lovisa has made no announcements to the market since late October and today's sharp decline is therefore likely attributable to this morning's announcement from apparel chain Kathmandu Holdings Ltd (ASX: KMD).

Kathmandu reported weaker than expected Christmas trading results that have seen its share price fall by 12.6% to $2.29. The Christmas trading period is the most important and busiest time of the year for retailers. Expectations heading into the Christmas trading period for retailers were subdued and Kathmandu's announcement could be the first in a number of announcements that fail to meet expectations.

Kathmandu's announcement has created a ripple effect on the local market today with other retailers such as Myer Holdings Ltd (ASX: MYR) and Super Retail Group Ltd (ASX: SUL) down by 4.8% and 4.1% respectively on a day where the broader market is up 1.4%.

Foolish takeaway

Lovisa's share price has broken the previous 52-week low of $5.99 and is down 55.1% since posting a record high of $12.53 in June. The last time Lovisa traded around these sorts of levels was in October 2017.

A disappointing trading update and the general bearishness in global equity markets over the last couple of months has fueled the decline in Lovisa's share price. In October, the company reported a year to date comparable same-store sales decline of 0.9%, which was well short of its target of 3% to 5% growth.

In FY18, Lovisa managed to grow revenue by 21.4% to $217 million with margin expansion lifting net profit after tax by 23.8% to $36 million. The company reported basic earnings per share of 34.24 cents in FY18, which means the company is currently trading for around 16 times trailing earnings.

How Lovisa fared during the Christmas period is yet to be known, but the company does have some of the best growth prospects among Australian retailers with its ongoing international expansion having the potential to be very lucrative. With the company's interim result not due till February it may be prudent for investors to wait before deciding to invest. The February report will reveal whether the company's same-store sales performance has improved or worsened and how its international expansion is faring.

Motley Fool contributor Tim Katavic has no financial interest in any company mentioned. The Motley Fool Australia owns shares of Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on 52-Week Lows

A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently
52-Week Lows

Why is the Woolworths share price at its lowest point since 2020?

We haven't seen Woolies shares this low since COVID.

Read more »

A bored woman looking at her computer, it's bad news.
52-Week Lows

Why this $7 billion ASX 200 stock is falling hard today

Investors were not impressed with this company's performance during the third quarter.

Read more »

a woman looks down at her phone with a look of concern on her face and her hand held to her chin while she seriously digests the news she is receiving.
52-Week Lows

3 ASX 200 shares hitting multi-year lows while the market rallies: Time to buy?

These three ASX 200 shares are missing out on the market rally.

Read more »

Female worker sitting desk with head in hand and looking fed up
52-Week Lows

Mineral Resources shares hit an almost 4-year low. What's going on?

It's been a bad few days to own this stock...

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
52-Week Lows

Why I think this ASX penny stock is a bargain at its 52-week low

This health tech share hasn't been feeling the love from the market lately. But is there an upside on the…

Read more »

Sad looking man wearing a lion mascot, symbolising a falling Liontown share price.
Resources Shares

Liontown shares at 52-week lows as lithium slump extends further

Investors aren't buyers of the lithium share at these depressed levels.

Read more »

Piggy bank sinking in water symbolising a record low share price.
Resources Shares

BHP shares hit 52-week low! Here's what brokers say will happen next

BHP shares are now the same price as they were in January 2020.

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Mineral Resources share price sinks to 52-week low: Is it a buy?

Do analysts think this beaten down mining stock is in the buy zone?

Read more »