Pinned straw:
“Join the Lovisa America Team! Exciting times are ahead at Lovisa with many new stores opening across America. We are looking for our next amazing Lovisa Sales Super Stars to join our growing team.” Ref: Lovisa US website, job openings
I’ve been exploring job openings at Lovisa worldwide to get a sense of new store openings. My hunch is that the focus is on the Americas region, given the new logistics/warehouse facility that opened, which should allow the store count to ramp up. In FY24, there were only 17 new stores in the US compared to 72 the previous year. Did they hit operating/logistics capacity in FY24 and were unable to effectively open more stores?
The American website combines job searches for the US, Canada, and Mexico, reinforcing the comment at the last meeting that they look at geographic regions rather than country borders.
Based purely on job availability locations, there has been an increase in store numbers in the region:
- US: 23 new locations
- Canada: 5
- Mexico: 1
As shown below, there are also a few additional store locations in other countries.
This brings my estimate of new stores opened since FY24 to 36 plus. My rough analysis only captures stores needing staff, so it is far from perfect data, just an indication.
I’m in two minds about this. In around half a year, there have been less than half the store openings compared to the 99 from last year. Ideally, I would have expected to see a greater number of stores opening by now to capitalize on the Christmas trade.
However, I have no idea about the number of stores in the pipeline waiting on lease negotiations, etc. The US is far from saturated in terms of store numbers and locations.
I was unable to count the stores on the store locator map of the US, as they are not shown in list form only as a map. I don’t have the time/patience to count them now. Does anyone know a way to count the stores from a map easily? https://www.lovisa.com/pages/store-locator This would be a better data point.
Regarding China store openings, I found nothing on any new stores in China. I did come across Lovisa on numerous online platforms in the region, so it appears that China stores has been put on the back burner, opting for an online-only presence.
disc: held
I've revisited the store count analysis following the feedback received. Thanks everyone for the input.
Here's the updated breakdown:
Total stores: 973 (+73)
US stores: 221 (+14)
Using the location map, I've obtained an improved figure for the total store count. Note that while these figures represent my best effort, I'm treating them with a degree of scepticism as they're likely not 100% accurate.
That said, the stores listed on the location map add up to a greater number than previously calculated through the job openings, presenting a more optimistic outlook.
Interestingly, my location search by job openings suggested an additional 23 stores in the US. This implies 9 more stores yet to open. It also explains the broad job advertisements in some areas where they were recruiting for a range of positions at drop-in sessions, rather than individual openings.
There's also an extra 10 locations when comparing the website store locations to the job locations and a few decreases in store numbers. I'm always happy to see that, as it points to active management of less profitable stores and backs up their own messaging to cull underperforming locations.
So the 973 locations figure could be closer to 990+, an increase of at least 75-90+ new store openings at this stage of the year.
This represents a significant increase for the first part of the year. I'd be satisfied with an increase in store count between 120-150 over the year, so they're on the way to hit that.
My plan-thoughts:
Lovisa has grown into a large position in my portfolio over time, so I'm actively seeking reasons to challenge my conviction and potentially reduce my allocation. This analysis was part of that effort, especially with the upcoming meeting and change in management in mind.
However, despite the CEO change, I've maintained my position. My reasoning is that Lovisa has established itself as a robust business with strong systems and capable people driving their rapid global store expansion. I'm operating under the principle, at this stage, that it's harder to mismanage a great business, even with mediocre leadership. That said, I need to monitor how the new CEO performs and watch for any additional information regarding Viktor's departure. Lovisa has historically been tight-lipped so who knows.
Based on the above, there's enough evidence to suggest that the store increase rate has returned to a good level, so for now I'm holding.
And yeah still only one store in China.
For those that want to track store counts, and happy to muck around with Google Sheets, here's a start:
https://chatgpt.com/share/672d48f2-629c-8011-81b3-8d0ed1e7c45f
@Slew before FY24 I did a data scrape of the website into Excel, but it was quite time consuming to tidy up the data, and also you have to be careful when doing it, as it picked up some duplicates which had to be cleaned out. (I'm not all that skilled in data management, having more basic skills!)
That said, I got incredibly close to the FY24 number, and that, combined with the CEO change and SP at the time being above my valuation (for slower expansion scenarios) led me to exit in early June.
Given that the SP has come back into range for me, it is on my work plan to do another update, but I will wait until the HY closes, and before any trading update, so probably in the early days of the New Year.
But perhaps you have saved me some time - those growth numbers look pretty weak. And I wonder why Victor didn'y hang around.