Pinned straw:
Store opening: Harli + Harpa
Woah, I totally missed this! I've been away a lot in the last couple of months, but I just found out about this via the Intelligent Investor weekly report. (It was a 1-liner in the II report to explain the recent SP drop)
Thought I'd share it in case others missed it too.
Lovisa's ex-CEO Shane Fallscheer has opened a new jewellery store called Harli + Harpa. They launched their first store on the Sunshine Plaza last week, with a second one in Westfield, Doncaster.
Interestingly, I couldn't find a website for them, and their Instagram only has six images so far. Looks like a soft opening.
Their message: Harli + Harpa is positioning itself as ‘Your walk-in jewellery box’, focusing on fashion-forward, long-lasting pieces for every occasion, good tagline.
Fallscheer at the helm is a huge advantage for this new chain. With his Lovisa background, he knows the prime locations with the biggest ROI and will target those first. I reckon they could easily ramp up to 20+ stores quickly - he's probably got the funds to make it happen.
Excerpts from AFR, link below
"Mr Fallscheer has deep retail connections after working with billionaire Mr Blundy for three decades, and is aiming to shake up a sector that Lovisa has dominated with its affordable earrings and friendship bracelets."
"The retail executive surprised the market in October 2021 when he flagged his departure from Lovisa after 12 years leading the fashion jewellery company, which at the time of his exit spanned more than 550 stores in 20 countries."
"Mr Blundy, who is the chairman of Lovisa, said at the time that Mr Fallscheer was the driving force behind its creation."
A major threat is the potential migration of key Lovisa staff, which may have already happened. SF has working relationships with important players at Lovisa, making poaching or offering new opportunities very tempting. My thought has always been: if you wanted to compete with Lovisa, poach their product development staff first, followed by other key operational positions. So, this could be exactly what's happened here.
Another reason for Herrero’s departure?
Store layout looks familiar
Same goes for the Insta styling
It's worth noting that Claire's in the US recognized the threat of Lovisa and established a new chain called Icing to go head-to-head with them. However, in my opinion, they aren't in the same league as Lovisa, so I never really considered this a real threat. On the other hand, Harli + Harpa, with Fallscheer at the helm, is potentially a long-term real threat to Lovisa's business.
Where to from here:
I'll be tuning into the AGM on Friday, keeping a close eye on developments, and reassessing my options. It’s probably time to reduce my position size, which is quite large IRL due to cap growth. While the long-term impact on Lovisa will take time to materialize, there could be a quick hit to individual Aussie store profitability if they are head to head in a shopping centre.
For example, if jewellery spend in a shopping centre gets split between two stores, it immediately impacts Lovisa's profitability at a store level and, by extension, their bottom line.
held