Lovisa Share Price down on Weaker Earnings (ASX:LOV)

Today we take a look at the fortunes of Lovisa Holdings Ltd [ASX:LOV].

The Melbourne-based women’s jewellery chain is experiencing a tough 2020. Like most, they’re feeling the effects of COVID-19.

While the LOV share price may be down at present (sitting at $7.06 at the time of writing), the company is still paying a dividend.

ASX LOV Share Price Chart 1

Source: Optuma

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What’s happening at Lovisa?

With a large number of retail stores across the country along with international branches, Lovisa had been forced to close many stores for the time being due to the COVID-19 restrictions.

Luckily, some were able to reopen for trade — apart from the Victorian stores which are still in a strict lockdown along with the rest of the state.

These restrictions impacted the company and its figures with a 3.2% decline in revenue and a 7% decline in gross profit.

While it has been a challenging six months for the company, they have navigated it well with Managing Director Shane Fallscheer mentioning:

 We are pleased with what our team has been able to achieve through the disruptions to our business over the past 6 months, and whilst it has had a temporary impact to sales and profitability we remain confident in our growth objectives and have been able to maintain the balance sheet strength required to deliver on them’.

All up the company has a relatively strong balance sheet with over $20 million in net cash and no debt.

A capital raise is not out of the question though in the coming quarters.

The company’s strong management has allowed them to stick to their promise and pay a deferred interim dividend of 15 cents per share.

Some positive news for any investors as many companies right now are cutting dividend payments.

Where to from here for Lovisa Shares

While things look good right now, the fight may just be getting started. Consumer confidence is low, unemployment is high

ASX Lovisa Share Price Chart 2

Source: Optuma

Lovisa took a three-week jump up in price recently before starting to decline again.

With the high price of $8.83 set back in May 2020 and the charts bouncing off the resistance level of $5.85 since, that high it is a little directionless right now.

To be considered bullish it would need to break the high of $8.83, for bearish it needs to crack $5.83.

While not presenting too many trading opportunities for the short-term minded, for the long-term holder, the dividend sure is nice in these times.

Regards

Carl Wittkopp

For The Rum Rebellion

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Carl Wittkopp writes for The Rum Rebellion and has a diploma in Financial Planning. He specialises in the technical analysis of stocks.


The Rum Rebellion