LOV FY25 RESULT

FY25 revenues were up 14%, 4% above my estimates, and NPAT was up 4%, 3% below my estimates. In summary, what we saw was a reacceleration in the sales line in the SH, but little carry through to operational leverage.

The big surprise was the outlook, which disclosed in the first 8 weeks of FY26 that sales were up 28% and comps up 5.6%, (ie huge) after some quite sluggish numbers over the recent past. Demand for the product remains strong.  

Store rollout reaccelerated in the 2H (above my numbers by 3% for FY), which was a concern for me as the CEO switch was underway. Good to see strong momentum being exhibited now.

Operational leverage (ebit margin) is an issue, but understandable as the store rollout takes more overhead, and I suspect there is new store dilution. It would be helpful to get store profits by vintage so that the cost of immature stores is clear.  --You want to see op lev for more mature stores.

Gross margin was a positive surprise, and it is near software levels (82.1%), which is quite incredible when you think about it.

Geographical results saw ANZ little growth, as expected, NA and Europe strong and commentary that growth would continue. Asia remains a struggle for the format.

I forecast continual double-digit earnings growth for the next five years (at least). The transition and pause look behind the company now.

This is a big position for me and would add around $30 at this stage.