Lovisa's Sell-Off Meets a Founder's First Share Purchase in Over a Decade

Slowing comparable sales and a loss-making new brand hit the stock hard, but insider buying and a rate-cut narrative are rebuilding the case.

7 Oct 2026 · 4 min read

Lovisa fell around 40 percent from above $37 to near $21 through February and March 2026 on decelerating comparable sales and losses at its new Jewells brand, before founder and major shareholder Brett Blundy's buying and a rate-cut narrative helped the stock recover to around $25 to $26 by August, even as a new competitive threat from a rival founded by a former Lovisa executive began showing up in the numbers.

A disappointing result exposes cracks

ECP Asset Management detailed Lovisa's first-half FY26 result, showing total revenue up 23 percent but comparable store sales decelerating from 3.5 percent to 1.6 percent, disappointing market expectations, with the Australia and New Zealand region hit by an ongoing store refurbishment program and heavy investment in the startup Jewells brand. Pengana Capital Group said the stock fell 23 percent despite 20 percent profit growth, pointing to mild weakness in Australian sales momentum in a patchy retail environment. LSN Capital Partners exited its position entirely as part of a broader shift to a more cautious near-term stance on consumer discretionary names, while Oracle Advisory Group flagged the risk that rising Australian interest rates could hurt the domestic business, though it kept a partial holding given its continued belief in the global rollout story.

The bull case: margins, moat, and a rival's collapse

Auscap Asset Management pointed to Lovisa's roughly 80 percent gross margins and a return on equity higher than fellow retailer Nick Scali, arguing the disappointing February result and Jewells losses had sparked an overreaction, and that the business is well placed to capitalise on both the collapse of key global rival Claire's and its own continued global expansion. Blue Boat Capital made a similar structural case, noting Lovisa faces heavy competition with no obvious barrier to entry in its industry, yet has succeeded on every continent through a high-margin, vertically integrated retail model that efficiently delivers a constantly refreshed product range. QVG Capital noted founder Brett Blundy added to his already large, more than $900 million, holding after 11 years and 3 months without buying, while Lennox Capital Partners said it topped up its position on the valuation upside it saw.

Rate-cut hopes and insider buying build the case for a re-rating

Seneca Financial Solutions named Lovisa its preferred pick in the retail sector in July, arguing that once the Reserve Bank is done hiking rates, retailers broadly become a buy after years of avoidance, and that Lovisa's store rollout has delivered incremental returns on capital that keep improving, alongside a track record where buying the stock on 20 times earnings has never lost money historically.

You've never lost money buying LOV on a 20x P/E; major shareholder Brett Blundy has been buying, and its loss-making Jewels venture is obscuring underlying profitability.

— Seneca Financial Solutions, Article, July 2026

Wilson Asset Management grouped Lovisa with Eagers Automotive, Zip Co, Skin Kandy and Nick Scali as consumer discretionary names well placed to benefit once domestic rates pivot to cuts in calendar 2027, arguing near-term conditions remain tough but that Australian rates have peaked and positioning across these stocks is close to washed out. Auscap Asset Management described a business operating in more than 45 countries across over 1,100 stores, delivering 150 new styles a week and generating $86 million in earnings on just under $800 million of FY25 revenue, with its Jewells brand still tiny at seven UK stores. By August, Seneca Financial Solutions reiterated its buy rating, citing 14 percent EBIT growth in FY26, continued store rollout runway across Asia and the US, and an undemanding roughly 20 times earnings multiple, taking Blundy's first share purchase near current levels in years as a positive signal.

A new competitive threat emerges

Forager Funds struck a more cautious note in August, saying it likes the business but views it as too expensive at current levels, and flagging a competitive risk that did not exist five years ago: Honey and Harper, a rival founded by a former Lovisa chief executive, is expanding aggressively in Australia and has begun showing up in Lovisa's own numbers.

What fund managers say they are watching next is whether comparable sales growth reaccelerates once store refurbishments finish and Jewells moves past its loss-making startup phase, continued execution on the Asia and US rollout, whether Australian rate cuts materialise in 2027 as several managers expect, and how much share Honey and Harper's aggressive domestic expansion takes from Lovisa's home market.