In December, the Fund participated in the IPO of Lovisa (LOV), an Australian based specialist fast fashion jewellery retailer with 220 stores across...

In December, the Fund participated in the IPO of Lovisa (LOV), an Australian based specialist fast fashion jewellery retailer with 220 stores across Australasia, South East Asia, South Africa and the Middle East. LOV has a vertically integrated business model that delivers quality, affordable and on-trend products from concept to shop floor in approximately 8-10 weeks. Product innovation is the key to LOV's competitive advantage. LOV's vertically integrated model has underpinned gross margins in excess of 75% and helped to ensure that it is profitable in each of the eight countries in which it operates. The store network in Australia is relatively mature (although like for like store sales growth is above 10% in FY15 to date) with approximately 157 stores. The strong cash flow generated in the Australian market is expected to fund the continued roll-out of offshore stores. The stock closed the quarter at $2.34, a 17% premium to its IPO price. We remain bullish on the company's long term growth prospects which ought to see it deliver double digit EPS growth over the medium term.