LOV FY25--top 10 position--Reaccelerating!

 LOV FY25 RESULT

FY25 revenues were up 14%, 4% above my estimates, and NPAT was up 4%, 3% below my estimates. In summary, what we saw was a reacceleration in the sales line in the SH, but little carry through to operational leverage.

The big surprise was the outlook, which disclosed in the first 8 weeks of FY26 that sales were up 28% and comps up 5.6%, (ie huge) after some quite sluggish numbers over the recent past. Demand for the product remains strong.  

Store rollout reaccelerated in the 2H (above my numbers by 3% for FY), which was a concern for me as the CEO switch was underway. Good to see strong momentum being exhibited now.

Operational leverage (ebit margin) is an issue, but understandable as the store rollout takes more overhead, and I suspect there is new store dilution. It would be helpful to get store profits by vintage so that the cost of immature stores is clear.  

Gross margin was a positive surprise, and it is near software levels (82.1%), which is quite incredible when you think about it.

Geographical results saw ANZ little growth, as expected, NA and Europe strong and commentary that growth would continue. Asia remains a struggle for the format.

Note a reasonable-sized competitor (Claires rev $1.3b) has closed for biz, so LOV is well positioned to gain share in NA and Europe.

I forecast continual double-digit earnings growth for the next five years (at least). The transition and pause look behind the company now.

This is a big position for me and would add around $30 at this stage.

Transcript with highlights

John Cheston   CEO & Director

Thank you. Good morning, everyone, and thank you for taking the time to dial in today. On the call today, you'll have our Executive Deputy Chairman, Mark McInnes; our Group CFO, Chris Lauder; and myself, John Cheston, Global CEO. As you are aware, this morning, we published our full-year results to the ASX, and we would like to talk you through them now.

I will now do a page turn through the highlights of the presentation, and we're happy to take questions at the end.

If we start by turning to Page 4, we will talk through some of the highlights of the year. I'm pleased today to present another solid result for the FY '25 year, which is again evidence of the strength in the team, the product and the potential of the business. Our store rollout continued throughout the year, gaining strong momentum in the second half, opening 162 new stores for the financial year taking the store network to 1,031 stores at financial year-end. This allowed us to deliver solid growth in total sales of 14.2%, which included comparable store sales up 1.7% on the prior year.

Gross margin was again a highlight, offsetting the impact of upward pressure on cost of doing business as we continue to make investments into growing the business. As a result, we delivered an EBIT of $138.7 million, up 8.2% and an NPAT of $8.3 million, up 4.8%, which has allowed the Board to announce a final dividend of $0.27 to be paid in October.

If we turn to Page 6, you can see the sales performance for the period that shows the benefits of our continued store network expansion. Looking to our regions, growth was again strong in the European and Americas markets, with those regions providing the majority of new store growth. The Asian region continues to be the most challenging market and opportunity for improvement through a renewed focus on operational excellence.

I'll now hand over to Chris Lauder, our CFO, to talk through our financials.

Chris Lauder   CFO & Company Secretary

Thanks, John. Good morning, all.

If we turn to Page 7, gross profit was $654.7 million at an 82% gross margin, up on last year by 100 basis points, which was achieved on top of the 110 basis point increase achieved in FY '24 and 310 basis points higher than FY '22. This result has been delivered from tight management of pricing and promotion and our focus on keeping our inventory healthy as well as improved performance in management of shrinkage across the business. We continue to focus on the efficiency of our inventory position and are very pleased that we have been able to close the financial year in a good state.

Turning to Page 8. I'll talk to our profit. As you can see, we have again been able to deliver growth in both EBIT and NPAT despite investment into the business impacting on our cost base. We continue our ongoing investment into service and management structures, technology, supply chain and digital marketing and events to support our constantly growing business. The upward pressure on our cost of doing business was offset by the reduction in the CEO LTI expense from $11.9 million in the prior year to $2.1 million in the current year. As a result of all this, NPAT was up 4.8% compared to FY '24, with higher interest expense on store leases having an impact as a result of the ramp-up in new store openings in the second half.

Turning to Page 9, you will see that cash generated by the business has again been solid with cash from operations before interest and tax of $243 million for the year, reflecting tight management of our working capital. Cash capital expenditure for the period was $55 million, predominantly from new store fit-outs as well as store refurbishments and investment into support technology. Cash interest and lease payments were also higher than prior year due to the growth in the store network and the higher borrowings and interest rates.

Turning to Page 10, you will see that the balance sheet remains strong, with clean inventory position and significant liquidity available to fund growth. The solid profit result for the period and continued cash flow and balance sheet position has allowed the Board to announce an unfranked final dividend of $0.27 per share, taking full year dividends to $0.77, representing the distribution of surplus cash currently in the business. And whilst this is lower than last year, it reflects distribution of 100% of earnings, following higher payouts in recent years as we distributed surplus cash.

As we've said previously, the Board will continue to assess dividend levels each period end and determine the appropriate level of dividend based on profitability, cash flows and future growth CapEx requirements in the context of prevailing economic conditions. The Board did not currently have a specific dividend payout ratio, and we'll continue to base dividends on the cash flow needs of the company and the structure of the balance sheet.

I'll now hand back to John.

John Cheston   CEO & Director

Thank you, Chris.

If we turn to Page 11, a quick update on store numbers. The key driver of future growth for Lovisa continues to be our global store rollout. We finished the period with 1,031 stores trading in over 50 markets with 162 new stores opened for the financial year. Although the pace of rollout was slower than prior years in the first half, we remain focused on continuing to grow the store network globally and we were pleased that we're able to deliver a significant acceleration in the pace of rollout through half 2.

The strong base we have built in the European markets allowed that market to deliver the largest share of new store growth for the period with [ 86 ] new stores and provides us with a very strong base to continue to expand from. In the Americas region, we were able to make good progress in our Canadian store rollout, now trading from 32 stores in that market. U.S. store openings were also able to regain momentum with 23 new stores opened. We were also able to open 1 new company-owned market for the financial year with our first store in Zambia opened in the second half. And we also opened 3 new franchisee markets in the Ivory Coast, the Republic of Congo and Panama.

Turning to Page 12, you will see some images of our latest store fit-out concept called Series 5. This concept is designed to give a more refined and elevated feel to our stores and at the new piercing studio store in-store elements along with digital screens. This concept will become the basis for new stores and refurbishments over the coming year and will provide an enhanced shopping experience for our customers.

Turning to Page 14, you can see a recap of the business strategy, which sets up the keys to our success to date and our focus for the future. Our strategy is unchanged. We continue to be focused on the global expansion of our physical and digital store network. And as you've already heard, we have made strong progress in delivering on this strategy during the current financial year and have laid solid foundations for continued growth in the future.

We have continued our ongoing investments in customer experience, support systems and supply chain with the opening of our new 5,000 square meter U.S.A. warehouse in August 2024, which is now successfully servicing more than 250 stores in the Americas region. We have also invested during the period in enhancing our customer engagement through social media and events with a number of influencer events and piercing parties held in key locations around the world during the period. We remain excited about the future and believe significant opportunity exists for continued future growth.

On Page 15, I will talk to the trading update for FY '26 to date. Trading for the first 8 weeks of FY '26 saw comparable store sales for this period up 5.6% and total sales up 28% on the same period in FY '25. Since the end of the financial year, we have opened [ 16 ] new stores with 6 store closures with total store count at [ 1,041 ] stores and expect to see the store rollout momentum to continue. We continue to focus on opportunities of expanding both our physical and digital store network, and our balance sheet remains strong with available cash and debt facilities supporting continued investment in growth.

To summarize the financial year on Slide 16. Our sales performance was solid for the period with growth primarily from our network expansion with comp sales up 1.7% to deliver overall sales growth of 14.2%. Our global expansion delivered 162 new stores opened in the period, finishing the financial year with a total network of [ 1,031 ] stores. Gross margins were again outstanding at 82%, an improvement of 100 basis points on prior year, which was achieved along with the clean inventory position. This combined to deliver good profit growth with EBIT of $138.7 million, up 8.2% on the prior year, an NPAT of $86.3 million, up 4.8%, with our strong cash flow and balance sheet position, allowing the Board to announce a final dividend of $0.27 per share to be paid in October. We are also very pleased to be able to announce the strong start to the new financial year with comp sales up 5.6% and total sales up 28% for FY '26 to date.

I want to thank entire global Lovisa team of over 7,000 employees for the outstanding work they are doing to deliver these results.

And with that, I want to thank you for your time today. And we're happy to take any questions you have.

Q&A  

Aryan Norozi   Barrenjoey Markets Pty Limited

Just a first one for me, in terms of the store rollout, I appreciate it's going to be lumpy. There's always going to be ups and downs. But in terms of just directionally, like, in the second half of '25, you opened about 81 net new stores, excluding jewels. So you're annualizing at [ 160 ] stores at the moment, is that annualized rate the way we should be thinking about sort of the business' capacity and run rate moving forward? Or -- was there maybe some catch-up in terms of stores in the second half that makes it hard to annualize so maybe it's a bit less than that? Any colour would be appreciated, please.

Chris Lauder   CFO & Company Secretary

Ari, yes, as you know, we can't confirm or deny what the store rollout numbers are. But I think first half, we're obviously a bit disappointed in the pace of rollout, and we said that we had expected to ramp up in the second half, which it did, and more so towards the Q4. So yes, we're far more comfortable with where we've landed for the full year. And the pace in the first 8 weeks is probably a little bit slower than that. But as you said, it's lumpy and will vary over the course of the year. So yes, I think if you look at the FY '25 full year outcome, we're much happier with that sort of level, but obviously, it depends on timing of when leases are executed and we get them signed off and we actually get the stores open.

Aryan Norozi   Barrenjoey Markets Pty Limited

Perfect. And just on the cost growth. So I mean in second half '25, your costs of doing business grew about 28% and your stores on average grew 12%. Now I won't bother asking about does integration costs because you probably won't say it, but I'll leave it to someone else. But even if you assume a few million dollars for that, it's a big step-up in growth year-on-year. Like, to what extent are those costs in the base? And so moving forward, first of all, we have to annualize it. And second of all, you grow it on that base. Or is there a cost that will fall out of the business next year and these are maybe more temporary costs in the business?

Chris Lauder   CFO & Company Secretary

Yes, I think you're right. We're not going to be calling out any specifics on the jewels implementation costs. Otherwise, we would have put it in the announcement. So it's a trial pilot. We just like any other new market, we don't call out specifics about it. In terms of the underlying cost structure of the business, there was a lot of investment continuing in the second half in people structures in making sure that we've got the right both people and technology structures in place to continue to grow at the rate that we want to and support the much bigger business in over 50 markets around the world. So there's a bit of IT spend in there where a lot of that goes through as OpEx these days because everything is cloud-based, so that's impacted on the cost structure. And a lot of that cost is baked in, as you say. So we'll continue to annualize out when you're looking at the cost base.

Aryan Norozi   Barrenjoey Markets Pty Limited

Okay. So EBIT margins, despite your comp set of getting a bit better into 2016, your EBIT margins should still be falling into fiscal '26 versus 25. You did 17% EBIT margin this year. Given the annualization of investment, is it fair to say that EBIT margins will probably continue to step down into '26, and then you'll sort of do what it does based on comps?

Chris Lauder   CFO & Company Secretary

It depends on your assumptions around store growth, store network growth, and comps and the like, Ari. So obviously, we want to manage CODB coming down as a percent of sales, but we'll also continue to invest where we have to.

Operator  

The next question is from Ed Woodgate with Jarden.

Ed Woodgate   Jarden Limited

Congratulations to a great trading update. Can you hear me okay?

John Cheston   CEO & Director

Yes, we can, Ed.

Ed Woodgate   Jarden Limited

So I just want to ask on price increases. It looks like you put through some price increases there. Are there any other price increases you have? Can you give us some color on the quarter or qualitatively, how are you thinking about that and how that drove the trading update as well.

John Cheston   CEO & Director

Edward, it's John. There were some modest, and I used the word modest price increases in the Americas. As you know, we had the tariff situation, which we had to deal with. They were implemented. We haven't seen price resistance from the consumer. Our business in the Americas is very, very buoyant over the comp sale and the total sale. But obviously, we reacted as necessary, but they were very modest in nature.

Ed Woodgate   Jarden Limited

Okay. That's helpful. And in relation to jewels. So I appreciate you're not saying much and it hasn't been open for long, but are there any trends you can talk to there about how it's being received initially? Or if you don't want to speak about it at this point, I understand, but just to put a check.

John Cheston   CEO & Director

I think what we would say is the following. The U.K. for us is a very strong market. In total, we opened 32 new stores 7 of which were the trial concept stores for jewels. But let's not forget about the 25 Lovisa stores that we open. So that is a very strong territory for us, a very strong geography for us. We're learning. The jewels proposition was only opened at the end of the first week of June. We opened 7 stores. We're testing. We're learning. We're looking at the product proposition. We're looking at the services we provide, and we'll certainly update the market in due course.

Ed Woodgate   Jarden Limited

Yes. Fair enough. And then just given the context of the strong trading update and the strong rollout, I just want to understand some of the puts and takes, so we don't get too carried away. But with the GPMs, that was a great result for the full year. It looks like based on my background with numbers, they were down 60 bps for the second half if I've got that right. So just I'd be interested to understand how you're thinking about that into '26 just in the context of the price rises. Yes, any sort of color that would be helpful.

Chris Lauder   CFO & Company Secretary

Yes. I mean I'm not sure whether you're looking at first half versus second half or second half on second half, but it probably doesn't matter too much. Yes, I mean, gross margin generally has been on the improved over recent years and improved to a pretty high level. So we're very happy with where it's at. Different points in time, we'll see that move. We obviously had in second half some impact from tariffs in the U.S. and we put prices up to offset that. But obviously, that's gross profit dollars, not necessarily gross profit margin, so that can have an impact. But yet, I think we're happy with where we're at in gross margin and how that will flow into FY '26.

Operator  

Next question is from Garth Fanta with MST Marquee.

Unknown Analyst  

Could you just give us some color around the like-for-like sales of [ 5.6% ]. Is that constant currency? Or have you adjusted that to AUD to present that number to us? .

John Cheston   CEO & Director

That's cost of currency we always report.

Unknown Analyst  

Terrific. Cool. And then just the tax rate, because it looks like that was 27% for the year. Is that sort of where you believe the better tax rate for Lovisa is going to sit going forward? Or could you just give us a sense of where you think that's going to land now with some of the changes in some of the markets?

John Cheston   CEO & Director

Yes. It's probably a little bit lower than what we would normally expect it to be. I think if you look at all the different tax rates globally and average them out, it's a little bit higher than that. So there's a couple of things in there that helped to pull it down. In terms of previous tax losses that we hadn't recognized that we got to utilize during the year. But yes, it's probably a little bit higher than that going forward, but we're happy to have a lower number this year.

Unknown Analyst  

And then I mean we've chatted a bit on pricing. Can you maybe just talk to the promotional environment and how promotional you've had to be? I mean, obviously, you mentioned that in opening remarks, but are you seeing that you're having to harder on certain lines just against the competitors that are in the market?

John Cheston   CEO & Director

I wouldn't say specifically. I mean this business operates on 4 sales a year, like most retailers, a Christmas sale, a spring sale, autumn depending on which jurisdiction or geography in, and then a mid-season sale and then an autumn or spring sale, again, depending if you're Northern or Southern Hemisphere. So we've always consistently stuck to four sales per year. We've always had a value proposition to attract customers into our stores, extensively at the front of the store. But as Chris said, we've got strong margins. We're about 100 basis points increase in margin. And I think that's a testament to the strength of the product, the strength of the proposition in which our team are buying for our customers and the response from the customers to it. So typically, you see an erosion in margin if customers are not happy with your product because you have to mark things down, and we're not seeing that. So we're in good shape.

Unknown Analyst  

Terrific. And if I can, one last one. Just with [ Claire's ] and the situation in the U.S., is that going to potentially offer you some new opportunities in the U.S.? Or do you think it will be more the shop-in-shop part of their business that's impacted?

John Cheston   CEO & Director

Well, it's not missed on us. It's definitely not missed on us the situation of Claire's in terms of Chapter 11 in the U.S. and also the bankruptcy in Europe. As you know, they trade from 17 markets, North America, Canada and the U.S. and the 15 in Europe. We're in many of those markets. There's a couple we're not in. So this is a significant opportunity. It's not being missed on us. We're across it. We know what we need to do. and we see it as an exciting opportunity for market share grab.

Operator  

Next question is from Sean Xu with CLSA.

Sean Xu   CLSA Limited

My first is regarding, again, the trading update. That's a really strong like-for-like sales growth, shaping the first 8 weeks. Can you please give a bit more color on the breakdown by regions and markets, so a bit more insights on which market is driving the growth behind? And do you think you can maintain that rate of growth through the end of the year, please?

John Cheston   CEO & Director

Sure. We don't break down our comps by market, sorry to say. Obviously, you can see how we traded the financial year in terms of total sales, but you've got to break down by market there. That probably gives you a steer on where we're performing at our best. But yes, we're not breaking out the [ 5.6% ], but we are happy to be able to talk to a better comp number because it's been a lot lower than that for a while.

Sean Xu   CLSA Limited

No, right. Understood. And do you think that sort of a rate you will be aiming for towards for the full year FY '26?

John Cheston   CEO & Director

Let's put it this way. The second half saw an uptick in our comps. So we were disappointed in the first half. The second half, we had some good recovery, and we were pleased with the second half performance. That momentum has continued into the first 8 weeks of the new fiscal year. And without giving guidance, we are pleased with our performance. We're in 50 countries. I mean one of the great things about this business is we've got the natural hedge in 50 countries. As is always the case, some markets perform better than others, some are on and some are off. But the blend across those 50 countries, we're very, very encouraged with that positive start to the new fiscal year.

Sean Xu   CLSA Limited

Got you. If I may ask another question. Can you just give the tariff situation, is there any plan to I guess, meaningfully diversified away from China to take advantage of the tariff at charge? Are you moving to some other countries with lower tariffs? If that's a plan, I will be curious to know if any capacity constraint or quality consideration that will limit how quickly this diversification can happen?

John Cheston   CEO & Director

I mean we already make a small percentage of our product in other markets beyond China. So we're not totally dedicated in China. We have got diversification in other countries. Don't also forget the opportunity we have, with the economy of scale buying, the more products we buy, the more volume we buy, the more markets we open. We obviously have an opportunity with our vendors to secure better prices. So at this stage, we're happy with the blend of where we manufacture our products. Obviously, it still is highly dominant on China, but we continue to grow in other territories as well.

Sean Xu   CLSA Limited

Got it. Just a very last quick one from me. We hear a lot about retail and supermarket these days about the retail client and set issue, things in particular are bad in Victoria. I'm curious to hear what do you see locally [indiscernible] and globally, please?

John Cheston   CEO & Director

I mean it's interesting, Chris and I talked about this earlier this morning. We've made a lot of progress in terms of shrink and our loss prevention, and we're pleased with the progress we're making in terms of lowering our number. Often lost debenture or shrink is systematic in terms of process breakdowns or issues that you can control yourself. So we're not seeing this as an issue. We're focused on what we can do, what we need to do, and what we can do to improve our shrink position. But it's nothing of note that I would call out to you today that's causing us distress.

Operator  

The next question is from Sam Teeger with Citi.

Sam Teeger   Citigroup Inc.

When I'm looking at ANZ sales per average store, it seems like it's slightly going backwards. So I'm just wondering your store refurb is going to be concentrated in ANZ. And more generally, do you think the sales per store performance in ANZ is more of a function of emerging competition or maturity of the underlying concept.

John Cheston   CEO & Director

I think, Sam, what we would acknowledge is we've deployed quite a lot of capital on new markets in terms of our expansion globally. I think we would all acknowledge as an opportunity to renew some of our fleet over here in terms of the new Series 5 that we've shown images on in the deck. So that's on us to choose to revisit those stores and to spend some capital on them. From our point of view, competitors come and go. I mean, we see competitors exit the market. We see new competitors coming. It's on us to make sure the product is right, the proposition, the price and the marketing. We respect competitors, but there's nothing to see here. We focus on what we can do. But you'll definitely see a renewed kind of renewal of our fleet over in Australia and New Zealand.

Sam Teeger   Citigroup Inc.

Sure. And then the Series 5, it does look good, much improved. How many refurbs did you do with them in '25? How many are you planning to do in 2016? And what's the average CapEx on each of these?

John Cheston   CEO & Director

Well, we don't call out the CapEx in terms of what we spend on the stores. What I would say is we've now trialled Series 5 design in multiple markets across the world, and we've been very satisfied with the results that we're garnering from the investments in those new Series 5 stores.

Sam Teeger   Citigroup Inc.

So based on that, it's fair to say you'll accelerate the Series 5 rollout from here.

John Cheston   CEO & Director

We'll accelerate our Series 5 rollout when we look at a business case in a very methodical way, the size of the store, what the sales can take, the lease, the lease term and so on and so forth. There's a number of factors that go into them. But what I would say is we're pleased with the reaction that we're seeing to our Series 5 stores, and we've got evidence of those sales and those results across the world.

Chris Lauder   CFO & Company Secretary

I think, Sam, obviously, the refurbishment of the store often is tied to the lease renewals. So you don't expect we're just going to go out and refurbish her we store in the fleet because we've got a new series. It happens over a period of time.

Sam Teeger   Citigroup Inc.

Sure. But it's safe to say it will be higher in '26 than '25, given the trial has gone well.

Chris Lauder   CFO & Company Secretary

Yes.

Sam Teeger   Citigroup Inc.

And then, John, last question. Given you're new to the business and you come with a fresh perspective, what's your thoughts on the cost base of the business? And do you have any ideas in terms of how it can be optimized going forward?

John Cheston   CEO & Director

I think what Chris talked to, which is important to note, is that there's been investments in this business to drive sales aggressively and hard. We saw a significant upswing in second half and some of that is the benefit of the investment that was put into the business to drive store openings and to drive comp sales. We're particularly pleased with the acceleration in the first 8 weeks of the new financial year. But I think what this business has done very well, it's invested capital in systems, in people and infrastructure to make sure we're set to continue the roll out of the stores. So I look at it as an opportunity to leverage now, Sam, to leverage the investment that's been put into this business to accelerate in terms of store openings across the globe.

Operator  

The next question is from Chami Ratnapala with Bell Potter Securities.

Chamithri Ratnapala   Bell Potter Securities Limited

Welcome John, and Chris and Mark. And firstly, a solid result today. Two questions from me. I think, firstly, quite a bit answer to the questions on jewels and Claire's. But firstly, what's the timing on maybe jewels going global? Are you willing to sort of talk about it? And with Claire's Chapter 11, will that be expedited given that the opportunity lies and you have a good read across?

John Cheston   CEO & Director

I mean we're an entrepreneurial business. And doing a strategic trial of jewels in the U.K. is really what it is. It's a trial. It's a test and learn is to see how the consumer is reacting to the proposition, both in terms of the price product services that we offer, the store design. We're really not in a position to make a statement or a forecast in terms of how many stores and when and which companies we're not in that position. What we do efficiently and robustly as we monitor the sales, we monitor the return on the investment that was -- the capital injected to date. And when we're ready to talk about jewels, we'll do so. So I need you to look, if you could, as a trial and we're learning every day.

With regard to Claire's, we monitor the information that comes through both from the press and also from the market on that basis. We're across it. We're diligent and with the work given to that opportunity. And again, if there's something to share with you, we'll share it with you. But we think it's an exciting opportunity. It's a market share grab opportunity for us. Pershing is a good opportunity for us because they're a big operation in the [indiscernible] space. But I would urge you just to watch this space, but to be confident that we're across the opportunity, and we're alive to it.

Mark McInnes   Executive Deputy Chairman

Just to add to John's comment on that. I think it's true to say we know by country, by shopping center, every clear store where we're co-located and what the opportunity is. We already know that today. So I think John is giving you a good flavor of organizationally and globally, we see this as an opportunity.

Chamithri Ratnapala   Bell Potter Securities Limited

And then maybe on the digital side, you did say a bit at a high level. Anything on sort of would digital be sort of expedited, any initiatives to call out?

John Cheston   CEO & Director

I mean we're focused really on -- as you can see, at the moment, we're putting a lot of capital and a lot of investments in terms of bricks and mortar. I mean, we are a strong bricks-and-mortar trader. As we know, our average selling price and our units, the transaction are what they are. So we're a big supporter in bricks and mortar. Along that, we are committed to omnichannel in terms of e-commerce, both in terms of the initiatives we're driving. They coexist. I mean you can't have a retail business today without both. And we'll continue to invest in the right way for e-commerce and omnichannel. But really, this is a strong network of bricks and mortar, and you've seen that in terms of the 162 stores that we've opened last year and the 16 stores that we've already opened in this first 8 weeks.

Chamithri Ratnapala   Bell Potter Securities Limited

Perfect. And the last one from me is on just the regional performance. I mean, greater see the outperformance both in the U.S. and Europe versus sort of the NPAs on the other side. Would you call out that U.S. is your sort of best performing region at the moment? Or how do you view that versus Europe?

John Cheston   CEO & Director

I mean we don't specifically call out, which is the best market, which is the 1 we're happy with. I mean you've seen from the slides, we've put to the metal in terms of openings in Europe, and in the Americas. We've got a significant presence now in Canada. We've got a phenomenal presence now across the United States of America. But we're also a very, very strong presence in Europe. We've opened stores in Ireland, which have been performing well. We've got more stores and open more stores now in the United Kingdom.

Well, I think it's important, this is one of -- I think, the great thing about this business, it's one of Australia's retailers that has really gone on a global journey for 50 countries, and then we've got franchise countries on top of that. And we've been able to take this mineral business on a global journey and we're reaping the benefits of that, and we've had a strong start to the new financial year. So we don't call out particularly a market, but you can take it as read the fact that we're happy with the performance for the first 8 weeks of the new fiscal year.

Operator  

The next question is from John Campbell with Jefferies.

John Campbell   Jefferies

You've obviously covered a lot of ground and you've talked a little bit about sort of competitive dynamics, I guess, both online and off-line and reference Claire's once. But could you just maybe give a little bit -- particularly, John, given you're relatively new to the space, could you just give a little bit more color on what you're seeing in terms of competitive dynamic across the globe? Obviously, you've got a very successful retail format and whether you're seeing some of your direct bricks-and-mortar competitors aggressively roll out as you are and also potentially, whether -- you've talked a little bit about e-commerce, but whether you're seeing any sort of step-up in e-commerce, I know there's a lot of product that's sold online around the world, but anything noticeable from your end in terms of that competitive dynamic that you might call out.

John Cheston   CEO & Director

Mark and I have been doing this a long time 40 or 50 years. Competitors come and competitors go. I mean if you get too caught up on what's happening to the competitors say, you don't focus on your day job and what you get paid to do. So we respect competitors in all markets. Do we look at them? Do we visit them? Do we look at their proposition price, the product, the range, the quality of the service? Of course, we do. We've got to stick to this and focus on what we can do and what we can do well. So we observed the competitors around the world, but there's nothing we're seeing at the moment that is causing us concern.

The opposite, in terms of Claire's, I mean, that's a wonderful opportunity for our shareholders. We know, as Mark said, where they trade the stores, the size of the store, where they've got 2 stores in a location. This is a wonderful opportunity and one that we're taking very seriously.

Mark McInnes   Executive Deputy Chairman

And just adding to John's answer, I mean, both John and I come from a deep product background and we absolutely know if you focus on the customer and what customer needs in terms of product and that will drive incredible results. And I think you should know that, that's a key focus of ours.

John Campbell   Jefferies

Yes. Great. Just could I follow on just on the e-commerce front. Again, you briefly mentioned it. But are your e-commerce sales growing at a much faster rate than the totality of the growth in your bricks-and-mortar sales? Or is it really still a fairly small component of the totality of sales?

John Cheston   CEO & Director

I think let me answer it in a slightly different way, but I'll answer your question, but it's in a slightly different way. We're focused on comparable sales growth and top line sales growth. And we know the levers we are absolutely confident we know the leaders to deliver what our shareholders expect. And we will pivot between what we need to do in terms of bricks and mortar and online. And I would like you to have confidence the fact we know what we need to do in both channels.

John Campbell   Jefferies

Okay. So you still see e-commerce as a worthy channel to pursue path?

John Cheston   CEO & Director

Omnichannel is never going to go away for retailers. You can't exist today without an online platform and an online capability and a bricks-and-mortar capability that this business has a wonderful opportunity full stop. But as you've seen, our focus has really been on the 162 stores that we just opened in the last financial year. And particularly, as Chris said earlier, the acceleration in the second half. We opened 1/3 of the new stores in the first half and 2/3 in the second half. And we're excited on what's coming out of those store openings.

Operator  

Next question is from Chenny Wang with Morgan Stanley.

Chenny Wang   Morgan Stanley

Maybe just on China first. It appears that the second store was opened in the second half after being at 1 for some time. So yes, any thoughts on how you think about that market going forward would be great.

John Cheston   CEO & Director

I mean I can talk firsthand because I was up in China 2 weeks ago. So I can talk firsthand. China is not an easy market. I mean, we know this from a lot of international players who are trying to refine and work through their model. I mean there's many big operators who closed a lot of stores. The Inditex company have closed many, many stores in China. So all we're doing, and I reiterate what I've said about jewels earlier, this is a test and learn. We opened 1 store in Southern China. We've opened the second store in Beijing in Northern China.

And forgive me to have been repetitive, but what we're doing here is we're looking at how the consumers reacting to our product, to our price, to our profiles of our earrings, the drop of the earrings, to the length of the necklaces we sell. Before we met to that market in earnest and deploy capital, we're just testing and learning, but I was there. I gave you my attention a couple of weeks ago. But like Mark has said, it's a pretty challenged market over there in terms of the consumer. And we're in the business of opening stores where they are profit accretive and we can generate a significant return. So keeping it in view. We're not saying China is not going to be an opportunity, but we're cautiously learning, testing and understanding the market.

Mark McInnes   Executive Deputy Chairman

And just adding to that, we still see a significant runway in the U.S.A. and Canada and in European countries. And I think it's been John's absolute focus since joining about focusing the organization on where those biggest opportunities lie in the next 1, 2 and 3 years. And certainly, those parts of the world represent the biggest opportunity.

Operator  

[Operator Instructions] The next question is from Allan Franklin with Canaccord Genuity.

Allan Franklin   Canaccord Genuity Corp.

Just wanted to reframe a couple of questions earlier on cost growth, please. Could you maybe just give a bit of detail on the pace of employee growth through the period? And if you can, to the extent of what the employee count was in December '24 versus June '25?

John Cheston   CEO & Director

Yes. I mean we can't give you the employee count numbers that level of detail. But obviously, the head count increases as we roll out more stores. So Q4, we opened a lot of stores so we place to trade those stores. Some of the markets that we've opened in have got higher store wage costs to employees. So that pushes it up. But the objective there is to manage that as a percent of sales. Support-wise, we've definitely invested more headcount and some senior people to help run a much larger business and just the ongoing investment that we do and that we've been talking about for a long time, where we know that we need to continue to invest. And when we think we've got enough structure in place to run the business, then we have to keep going because we keep opening more stores. So yes, it's an ongoing piece of work.

Allan Franklin   Canaccord Genuity Corp.

Sure. And then just in the other expenses, I think there's a quarter other buckets that accounted for $15 million of the increase of [ '26 ]. Can you provide a bit of detail of what's in there. I don't think it was a material change in the first half. It feels like a lot of that is coming into the second half?

John Cheston   CEO & Director

Yes. I mean that's called other because it's full of a lot of other, obviously. So there's a lot of different things in there that rolling up to those numbers, what's included in there, things like marketing investments, so where we've invested more into digital marketing and events and all those other things that we've called out. There's some of the setup costs of jewels are in there. There is a few other things in there that I'm just trying to remember what they are.

Allan Franklin   Canaccord Genuity Corp.

But it's sort of a number that probably stays as you move forward a different way.

John Cheston   CEO & Director

Absolutely. So there's not a lot of lumpy one-off things in there that are going to reverse in FY '26. So largely, you can assume that's baked into the cost structure.

Operator  

There are no further questions at this time. I'll now hand it back to Mr. Cheston for any closing remarks.

John Cheston   CEO & Director

Okay. Thank you. Well, firstly, most importantly, I appreciate you all dialing in to ask questions and to listen we've said what we've said. We're encouraged with the start of the new financial year. I think the comp sales growth are very encouraging, and the top line growth of 28% is very encouraging. We know the markets where we've got the opportunity, we know what we need to do, and we're at it, and we appreciate your time and your support, and we wish you a good day.