Brett Blundy-backed Lovisa in rapid store roll-out to cash in on rival Claire’s demise

Lovisa says it has moved quickly to cash in on the demise of major rival Claire’s to grab market share but its profit and earnings growth disappointed analysts, sending shares plummeting.

The group, backed by billionaire retailing magnate Brett Blundy, opened 85 new stores and closed 14 in the six months to December 28, taking its total network to 1095 outlets across 50 markets, including the US, UK, NZ and Singapore.

And while Lovisa global chief John Cheston was tight-lipped on how many were former Claire’s stores, he said “the number’s increasing now”.

“Some of the Claire’s stores were in poor centres and some of the Claire’s stores were in poor locations within good centres so we’ve been very selective,” Mr Cheston told analysts on a call on Thursday as it handed down half-year results.

“We’ve not taken this approach of there’s 50 (stores) available, let’s take them all.”

Claire’s — once popular with tweens for its brightly-coloured accessories — declared bankruptcy in the US last August, the second time in seven years, citing nearly $US500 million ($707.8m) in debt amid an increasingly competitive environment.

Weeks later, private equity firm Ames Watson offered a lifeline by buying about 1000 Claire’s store across North America.

More recently in January, Claire’s UK and Ireland operations collapsed in administration.

“Claire’s is an opportunity in many territories . . . they have a piercing business and we have a piercing business, we can obviously take take market share,” Mr Cheston said.

Lovisa said revenue increased 23.3 per cent to just over $500m in the half. The retailer said comparable sales — which doesn’t take into account the new 85 stores opened — rose just 2.2 per cent.

Earnings jumped 20 per cent to $98.3m, missing UBS’ expectations of $105.8m.

A $10.8m loss at its UK-based upmarket brand, Jewells, which has six stores, meant net profit grew just 2.6 per cent to $58.4m, also missing UBS estimates.

The profit and earnings miss sent Lovisa shares down 12.8 per cent by the close to $27.04 apiece.

Mr Cheston took the reins at Lovisa last June after more than a decade running stationery giant Smiggle, owned by Solomon Lew’s Premier Investments.

Smiggle has been without a permanent chief executive for over a year after Premier dumped Mr Cheston amid allegations of serious misconduct.

Mr Lew last September revealed the probe into Mr Cheston uncovered stunning allegations of former executives being drunk during work hours, bullying, sexual harassment and bribery. Mr Cheston has always denied the allegations against him.

Meanwhile, youth-focused retailer Universal Store defied a challenging retail environment amid higher cost-of-living pressures to deliver a 14.2 per cent rise in group sales to $209.6m in the December half.

Net profit jumped 150 per cent on the prior corresponding period to $28.3m.

“We note that the youth fashion customer remains discerning, choosing to spend on quality, on-trend clothing from brands they love,” Universal Store chief Alice Barbery said.