Macquarie turns bullish on Lovisa

Broker Macquarie has hiked its valuation on Lovisa by 47 per cent from $17 to $25 as the budget jeweller targets growth in India and China.

“Incoming CEO Victor Herrero has developed experience in his career, at companies such as Inditex and Guess, in brand enhancement and store rollout, with China and India being prominent examples of his geographical success.

“We note the costume jewellery markets in China and India collectively exceed the US market by about 15 per cent,” the broker said.

“We understand the total addressable market size for Europe is smaller than the US based on the relative number of potential sites, suggesting China and India also collectively exceed this market.

“We are confident in Lovisa successfully managing pricing, language, product and competition should expansion into China and India come to fruition. Furthermore, while the strategy for Lovisa will only be fully understood in time, we consider the ability for international retailers to command higher price points in these markets relative to home markets as being supportive for the strategy.”

Macquarie’s analysis suggested Lovisa could target around 1400 or more potential sites in China and India alone.

Lovisa shares last closed at $21.62.

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