Pinned straw:
I have a few companies reporting today. At a quick glance the Lovisa results look good, and ahead of FY24 analyst consensus. ROE, based on doubling 1H24 NPAT (ie. $107 million) and 1H24 equity reported ($104 million) is approx 100%. This assumes next half will be as good as 1H24. Does this look right Strawpeople?
I’ve been working on ROE of 90% for my valuation. I think the market will like it. I hope I haven’t made any huge errors here. I’ll have a more accurate look later.
Summary:
• Revenue up 18.2% to $373m with improving trend through Q2
• Comparable store sales down 4.4% on HY23
• Gross Margin 80.7%, up 40bps
• 74 new stores opened during the period, 854 at period end
• China and Vietnam markets opened during the half year
• EBIT $81.6m up 16.3%
• Net Profit After Tax up 12.0% to $53.5m
• Operating cash flow of $150m up 29.1% on prior period
• Net Cash of $15.5m at period end, with $120m of available cash facilities in place
• Interim Dividend of 50.0 cents per share, 30% franked
That working capital position while rolling out stores and with declining SSS is impressive. LOV runs on the smell of an oily rag. Always has. That's the secret sauce. It's very hard to get in too much trouble when you can bag $300m in GP off $60m in inventory in a year let alone in 6 months.
