Why are Lovisa shares sinking 10% on a green day?

The exit of a highly regarded CEO is weighing on the retailer's shares.

| More on:
A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.

Image source: Getty Images

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 market may be pushing higher today, but the same cannot be said for Lovisa Holdings Ltd (ASX: LOV) shares.

At the time of writing, the fashion jewellery retailer's shares are down a sizeable 10% to $30.58.

Why are Lovisa shares sinking?

Investors have been heading to the exits today after the company announced that its CEO, Victor Herrero, will be stepping down from the role next year.

According to the release, Herrero has agreed to an amended employment contract through to 31 May 2025.

After which, the highly regarded CEO will be replaced by John Cheston, who will join the company on 4 June 2025.

Why the reaction?

While CEO exits often receive poor reactions from investors, Lovisa shares are falling particularly heavily today. This is because the appointment of Victor Herrero was a real coup for the company and a key reason why many invested (myself included) in the company.

The outgoing CEO has been instrumental in Lovisa's global expansion. And while a lot of the hard work has certainly been done since his arrival in 2021, there's still a lot more to come. The market may be concerned that his exit now puts at risk the successful execution of this expansion.

Herrero joined Lovisa having spent 13 years with the Inditex Group, which is one of the world's largest fashion retailers (Zara, Pull & Bear and Massimo Dutti). During his time at Inditex, he held numerous roles including Head of Asia Pacific and Managing Director Greater China and led the company's expansion through this region rolling out 800 stores across multiple countries including China and India.

After which, Herrero spent four years as CEO of Guess, and was then the chairman and CEO of international shoe manufacturer and retailer Clarks.

The good news is that Lovisa's chair, Brett Blundy, remains positive on the future and was pleased with the appointment of John Cheston. He said:

The Board and I are pleased to announce that Victor has entered an amended 12-month contract. The Board and I are also pleased to announce that John Cheston will join us as CEO and Managing Director on the 4th of June 2025. John is a highly successful Global retailer and will join Lovisa at a very exciting time as we continue our global growth.

Cheston is currently the CEO of Smiggle, which is owned by Premier Investments Limited (ASX: PMV). Its shares are down on the news of his departure from the role.

Given that Smiggle has also been successfully expanding internationally in recent years, Cheston appears to be a worthy CEO of Lovisa and should be able to pick up where Herrero leaves off.

Should you invest $1,000 in Articore Group right now?

Before you buy Articore Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Articore Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has positions in Lovisa. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Supermarket trolley with groceries going up the stairs with a rising red arrow.
Consumer Staples & Discretionary Shares

Woolworths shares have soared 18% since March. Here's how much upside Macquarie still expects

Having raced higher since March’s multi-year lows, just how high can Woolworths shares go?

Read more »

A customer and shopper at the checkout of a supermarket.
Consumer Staples & Discretionary Shares

Broker watch: Are Woolworths shares a buy?

Do analysts think this supermarket giant would be a good pick for investors? Let's find out.

Read more »

Supermarket trolley with groceries on top of a red pointing arrow.
Consumer Staples & Discretionary Shares

Up 31% in a year, just how much more upside does Macquarie tip for Coles shares?

Can Coles shares smash the ASX 200 returns again in the year ahead?

Read more »

A customer and shopper at the checkout of a supermarket.
Consumer Staples & Discretionary Shares

Woolworths shares storm higher on strong Q3 update

The supermarket giant outperformed expectations during the quarter.

Read more »

A woman holds up hands to compare two things with question marks above her hands.
Consumer Staples & Discretionary Shares

Compare the pair: Accent Group vs JB Hi-Fi shares

Which is a better option out of these two consumer discretionary shares. 

Read more »

person sitting at outdoor table looking at mobile phone and credit card.
Consumer Staples & Discretionary Shares

If I could only own 1 ASX retailer for the next 5 years it would be this one

This stock could be a great long term pick according to one leading broker.

Read more »

A couple in a supermarket laugh as they discuss which fruits and vegetables to buy
Consumer Staples & Discretionary Shares

Coles share price drops on Q3 update

Let's see how the supermarket giant performed during the three months.

Read more »

Business man with a cigar in his mouth counting US dollars.
Consumer Staples & Discretionary Shares

Both Labor and the Coalition to crackdown on illicit tobacco trade, which ASX stocks could benefit?

Could a tobacco crackdown benefit these stocks?

Read more »