Rumours of Lovisa going public were confirmed on 18 December 2014 when the business was listed on the Australian Securities Exchange (ASX) at an opening price of $2.
The debut of the company – which falls under the portfolio of BB Retail Capital (BBRC), an investment group owned by retail veteran Brett Blundy – was described by a number of media reports as being one of the strongest floats in 2014.
The share price closed 7.5 per cent higher on the first day of trading and, at the time of publication, shares were trading around $2.45.
“Lovisa raised $102 million in the initial public offering (IPO) and it peaked at $2.15,” Retail Doctor Group founder and CEO Brian Walker explained. “It’s been very pleasing. In fact, when it launched, it actually shone out amongst quite a lot of the relative ASX listings.”
Smart strategy
Walker believed the decision to take the jewellery chain public had been “a very smart move all around”.
“It provides Lovisa with capital to go global,” he said. “My understanding is that they’re going to look closely at the Asian and South African markets.”
Walker stated the business – which was founded in 2010 and currently has more than 220 stores across eight countries – had a market capital of about $210 million and was likely to succeed, unlike its sister jewellery chain, Diva. As previously reported by Jeweller, the operational status of Diva remains unconfirmed, with a number of stores closing and others being converted into Lovisa outlets throughout 2014.
“Diva was really targeting the tweens and teens,” Walker said. “Lovisa gives an invitation to go to a slightly older and broader market and I think has more replication globally for them. I think that’s exactly what they’re looking to do.”
While BBRC’s stake in the business had been reduced as a result of the public offering, Walker said it would still “have its hand on the rudder”.
“BBRC has traded down its ownership from 82 per cent to 41 per cent, but that will be 41 per cent of a much bigger business if its expectations are realised.”
Additionally, Walker pointed out that international markets were starting to change in a way that could be favourable for Lovisa and similar businesses with “shopping centre-type models”.
“They’re [Lovisa] talking about opening somewhere around 20 to 30 new stores internationally per year in the medium term, and I expect they’ll renovate and grow a similar number in Australia,” he said. “There might not be so many new stores in Australia; it’ll be more about renovation and keeping pace with the property development growth.”
At the time of publication, Lovisa had not responded to Jeweller’s request for comment.
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