Store network

This ASX 300 retail share could grow its global store network by 260%: fundie

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A fund manager chose a S&P/ASX 300 Index (ASX:XKO) retail share which it believes could significantly expand its global store network.

This ASX share is an affordable jewelry retailer Lovisa Holdings Ltd (ASX:LOV).

Monash Investors co-founder Simon Shields shared the opinion on Live Cable, saying Lovisa was his choice as a company to buy and hold for five years. He said:

There’s still a very long store rollout underway in the US and Europe – from 550 stores right now, we could easily see 2,000 in the next seven to eight years.

The earnings numbers will rise and the share price will follow.

Shields said he thinks Lovisa is a “good deal” that will offer good value, even if its share price has yet to drop a bit. Shares of Lovisa were trading up 4.43% at $14.15 at the close on Thursday.

What is the attraction of Lovisa?

Lovisa is set up with a vertically integrated model, which means it has its own product and brand. The company claims to have a significant cost advantage through direct factory sourcing, with products made in cost-optimal locations such as China, Thailand and India.

According to the ASX 300 retail share, the company places a heavy emphasis on data analytics for inventory management, with a business model that underpins “consistently strong gross margins” of more than 75%.

Lovisa noted in an investor presentation that it has a central buying team, which is “very responsive” to fashion and sales trends with “proven success” in bringing new products to market. which are fashionable.

The ASX 300 retail stock has built a global logistics infrastructure to help it achieve its growth ambitions. It has logistics centers in Melbourne, China and Poland, with dedicated e-commerce warehouses in the UK, US and South Africa.

Regarding its network of stores, the management is counting on an international deployment. It opened 59 new stores in the year to April 2022. In the United States, it opened 38 new stores in the year to date, and it now markets in 31 US states.

Lovisa notes that a global rental team is in place to drive growth in existing and new markets.

Future prospects

In describing its future, Lovisa said it is working towards continued expansion of its current markets with the same “successful disciplines” and criteria used to date. It’s also about investing in the team to stay ahead of the growth curve and build global capabilities.

Lovisa also continues to focus on digital platforms to help its online sales.

The ASX 300 retail share aims to identify new markets to drive its Lovisa brand.

Business Update

The company noted that trading in the first eight weeks of the second half of FY22 saw store sales for that period increase 12.1% compared to the same period of FY21. increased by 61.7% compared to the same period of FY21.

Lovisa says the sales momentum continued in the second half through the end of April.