Lovisa (ASX:LOV) AGM Today: Should You Buy This International Retail Success Story or Wait for a Pullback?

Lovisa Holdings (ASX: LOV) shares plunged 10% to around $31.45 today after the company released a trading update ahead of its annual general meeting. Despite expanding its global store footprint by 44 locations in the first months of FY26, the market focused on one concerning detail: growth is slowing. Total sales increased 26.2%, down from 28% growth in the first eight weeks, while comparable store sales decelerated to 3.5% from 5.6%. For a stock that hit an all-time high of $43.68 just three months ago, today’s selloff raises an important question: Is this the buying opportunity growth investors have been waiting for, or should you let the stock prove itself after this momentum loss?

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Lovisa’s Global Expansion Remains on Track Despite Market Doubts

Lovisa’s global growth story is still strong despite market concerns. The company now runs 1,075 stores in over 50 countries, adding 148 in the past year as part of a clear plan to reduce reliance on Australia and tap faster-growing markets overseas. Its fully integrated model, designing and selling all its own products, helps it react quickly to fashion trends and keep margins healthy, driving expansion in the US, Europe, and Asia. Under new CEO John Cheston, known for building Smiggle globally, Lovisa is sticking to this strategy. The challenge is whether opening more stores can offset slowing sales growth in existing ones, which recent results suggest may be difficult. Still, the scale of its footprint and strong demand for affordable accessories show the brand has momentum. Investors now need to decide if rapid international expansion can continue to outweigh softer performance at home.

The Valuation Reality: Premium Multiple Demanding Perfect Execution

Here’s where the investment case becomes more challenging. Lovisa currently trades on a forward price-to-earnings ratio of around 27, more than double the retail sector average of 11-12.
What this means for investors: you’re paying a 140% premium to the sector, essentially betting that Lovisa can deliver growth well above typical retailers for years to come. At this multiple, even meeting expectations may not be enough to drive meaningful share price gains; the company needs to consistently exceed them.
The comparable store sales deceleration from 5.6% to 3.5% is particularly concerning because it indicates the existing store base is generating less momentum. We believe this is the real issue the market is worried about. When you combine slower same-store sales with a premium valuation, the margin for error narrows significantly. While analysts forecast earnings growth of 16% per annum, today’s trading update suggests that the growth rate may prove optimistic if the current trend continues. The company still delivered solid absolute numbers; total sales up 26.2% is nothing to dismiss, but the market prices stocks on trajectory, not just current performance. With the stock still up 17% over the past year despite today’s drop, Lovisa has clearly rewarded believers in its international expansion story.

The Investor’s Takeaway

Despite today’s 10% selloff creating a better entry point than yesterday, we think conservative investors should resist the urge to buy the dip. Here’s why: The February 2026 half-year results will provide crucial evidence about whether this slowdown is temporary or the start of a more persistent trend. Given the premium valuation, there’s significant downside risk if comparable sales growth continues to weaken.

The specific concerns we’re watching:

– Comparable store sales falling below 3% would signal structural problems
– International expansion costs potentially pressuring margins in FY26
– Consumer spending weakness in key markets like the US and UK

For investors already holding Lovisa, the long-term international expansion story remains intact, and today’s weakness doesn’t warrant panic selling. However, for those looking to establish new positions, patience will likely be rewarded. If the company reports stabilising or improving comparable sales in February, that would present a far more attractive entry point with confirmed momentum.

Bottom line: At 27 times forward earnings, the valuation demands near-perfect execution. Until we see evidence that the growth deceleration is reversing, the risk-reward favours waiting. Better entry points likely lie ahead if today’s concerns prove valid, while if they don’t, you’ll have the clarity worth paying slightly more for.