Shares in jewellery retailer Lovisa surged 25 per cent in early trade after the company lifting its payout to shareholders despite a weak first-half sales performance in Australia.
Lovisa's net profit for the six months to December was up 2.7 per cent at $25.5 million on a 12.3 per cent revenue lift to $133.2 million, with sales accelerating at the chain's burgeoning European and US outlets.
But revenue growth across all segments was offset by a 1.8 per cent decline in like-for-like global sales.
Lovisa said Australian sales were a particular drag amid softer trading conditions, with the negative comparable store result following four years of overperformance.
"Whilst we are generally happy with our execution of meeting customer needs in product and in store execution for the period, we have not seen the same major trends in the fashion jewellery sector as we have seen in recent years that have helped drive strong comparable store sales in prior years consistently above our target growth range," managing director Shane Fallscheer said in a release on Wednesday.
Nevertheless, the jeweller's share price spiked to a four-month high of $9.67 in early trade on Wednesday after lifting its interim dividend five cents to 18 cents, full franked.
The company was trading 21 per cent higher at $9.355 at 1500 AEDT.
Lovisa said it is planning to accelerate the number of stores opened in the second half of the financial year, having added 51 and closed 11 in the six months to December for a global total of 366 stores.
There were four extra stores added in Australia, its largest division at 155 stores, while 12 were added in the UK, seven in the US, and six in the Middle East.
The company said trading in 2019 had so far improved across all markets but was still still below the target comparable store sales range of 3 to 5 per cent.
Lovisa also expects currency headwinds to begin to have an impact later in the financial year and into FY20 as its average US dollar hedge rate reduces.
LOVISA STOCK GLIMMERS DESPITE MIXED INTERIM RESULT
* Net profit up 2.7pct to $25.5m
* Revenue up 12.3pct to $133.2m
* Interim dividend up five cents to 18 cents, fully franked.
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