No better problem than a tax problem @mikebrisy ;)

Seriously though, congrats on a great trade, and well done on sticking to your process.

@Strawman thanks. I was a bit nervous putting the trade on at 10:00am this morning, but the volumes looked OK. (When I saw the volumes coming in I even adjusted my price limit down to $31.00!) Happy with the price I got - $32.75.

Its another example where I have done a fundamental valuation on a market darling that had been dragged down by sector sentiment and started to lose its shine. The previous one was $ABB.

I was super high conviction $LOV was worth more than $20. (It is one case where arguably I should have blown my position sizing "rules" - but then again for every good call there's been at least one bad one), It is still a great company, and I'd own it again at the right price.

Time to start sharpening the pencil on valuations in retail,...and elsewhere.

Also a reluctant seller. Something unusual in the news made me hit the panic button (like people said on what Victor was getting it was really unusual). Figured i'd just panic early and be done with it, still got a pretty good return out of it.

As discussed here late last week, I was mulling over reducing or exiting, and had started trimming on SM, though not in RL. The SM conversation prompted me to do some research over the weekend, looking at comparables recent reports (mainly overseas), consumer confidence data in key countries, and to analyse the changes in numbers of stores by country since end 2023.

My conclusion: I was likely to sell as my 12-month anniversaries of buying came around for each tranche - all getting in before the FY Results (albeit maybe not all before a trading update.)

So, I was primed to sell, just not expecting to this morning. The CEO change pushed me over the edge - because it supports my emerging view on results in the short to medium term. It was an esay decision, because I was pretty much ready to hop off the bus anyway.

As @UlladullaDave notes, retails stocks go up and down with wonderful frequency. If ever there was a sector where the efficient market theory doesn't apply ASX discretionary retail is it!

The AFR has covered the departure (Brett Blundy poaches new Lovisa boss from Solomon Lew’s retail empire).

Towards the end of the article there is some speculation on the reason for the departure:

Citi analyst Sam Teeger said he was surprised that Mr Herrero would depart given “previous indications were that he seemed content in the role and wanted to remain”.

Mr Teeger said that the 71 per cent remuneration cut for Mr Cheston could indicate what Lovisa had been willing to pay Mr Herrero. 

No idea if this is correct, but it's a reasonable point: Victor Herrero might have been happy to stay on but his compensation demands were not reasonable, or perhaps just not achievable.

> Every second article on Livewire – which a good froth barometer – seems to be some finance type pushing it.

Great point!

I had a long text to post on this that suddenly disappeared, probably my fault, touched something, i wont repeat it in full

im in two minds, the valuation is full, i suspect there are consensus momentum chasers in the stock that will have to be shaken lose at some stage (overowned), LULU NKE SBUX etc all near 12 month lows so not much conviction around the world for Con disc at the moment, except LOV, so some risk in the ST/MT.

re unexpected mgt changes are never great. the unusual thing here is that the replacement is lined up already, so this has been in the works for a while. VH was paid a motza, and did a reasonable job, but doesn't rate as a rock star (except for the salary lol) in my books, too soon. the connection with McInnes / Cheston is interesting, both from the Solie Lew camp. so he has been picked by McInnes who worked with him. I suspect PMV and LOV are not the easiest firms to work at, the expectations are high to deliver, but the new guy would know what is expected. the STI etc is a challenge, imo. either VH wanted to extend on terms BB wasn't prepared to go for or there is another issue, which could be anything.

in regard to rollout, i suspect it will be a rollercoaster as ive said before.

Well my first read of this morning's presentation confirms that Victor is leaving because he couldn't hit his targets. I need to look closer but that looks like a pretty bad set of numbers for a company that trades on 50x earnings. I know the Chinese economy is under a bit of pressure at the moment, but only 1 store opening in the last 12 months is...odd.

And I had no idea the SP was up at $37! Totally missed that. Watch out below I think.

@UlladullaDave I formed that view a couple of months back. I think part of why Victor was brought on was to repeat what he did for Zara in China, many years ago. So that one proof of concept store is looking awful lonely at the moment.

I was able to data scrape their website in June and counted .... 900 stores ... in fact I counted "just over 900" ... which was a rate of expansion consistent with the lower end of my valuation.

It is a great global model and executing well, but I felt it was over-valued at $34'ish when I sold, and am even more of that view today at $37. (...although obviously wishing I'd held on.).

So, I agree with you, pretty good results (in the current global retail environment) but for a p/e of c. 50 you need a lot better than "pretty good"!

(FWIW, I also think $BRG has gotten well ahead of itself following the lastest result, at a fwd P/E of 36, so I've offload half of my position in that. It's beautifully volatile, so in the words of Arnie ... "I'll be back")

"I've been here for four fiscal years,... and now it's time for me to go somewhere else."

Hardly a compelling or illuminating explanation!

It is absolutely fascinating listening to the Q&A on the $LOV results,...analysts trying to get forward looking insights before they return to their models. You can hear the futility in their voices as they ask for insights they know will not be forthcoming. Here's why.

Coming in to today's results, the market was already well ahead of the analyst consenus (see graph below). However, the analyst consensus was based on the following revenue growth numbers:

• FY24/FY23 +19.3% (+17.1% delivered)
• FY25/FY24 +18.2% (12.7% first 8 weeks)
• FY26/FY25 +16.5%

The problem, as we know in retail, is that because of the high fixed costs, changes in the top line get amplified in the bottom line - and it is the bottom line that drives value.

So, the speadsheet jockeys go back to their desks now with some potentially very significant changes to valuations, if they follow through on the logic of what they've heard today. Will they bottle it? It will be interesting to see where they land in the updates over the coming days. (While I've not updated my model ,... I'm seeing fair value towards the bottom of my range, which was $23-$37 ,,, so let's say a bottom of range of c.$26, allowing for 12 months time value of money) ! So this could be the start of an interesting phase for $LOV. Analysts usually, bottle it, so that sets up for potentially another leg down in 6 months.)

I'm remaining on the sidelines with this one for a while.

Disc: Not Held