The ASX retail share Lovisa Holdings Ltd (ASX: LOV) has seen plenty of ups and downs in 2025 to date. Following the shifts in its valuation, it's worth asking whether Warren Buffett would be interested in buying into the business.
Lovisa is a global fast-fashion retailer of jewellery through small stores. Lovisa says its trend-spotting departments worldwide take inspiration from couture runaways and current street style. It already has a large store network, with more planned for the future.
Broker UBS believes that Lovisa's store network has reached 1,000 as of May 2025, which represents an increase of 57 since the FY25 first-half result. It has continued to open new stores, particularly in places like Europe and Americas. In that time period since the FY25 first half, Europe store numbers increased by 32 to 320 and the Americas saw an increase of 15 to 251, with an increase of 10 in the US.
UBS is forecasting that Lovisa could reach 1,012 stores by the end of its 2025 financial year.
The broker said that Lovisa's total sales growth has been "predominantly" driven by net new store growth for the past decade.
I think Warren Buffett is one of the world's great investors. He has led Berkshire Hathaway to become one of the world's biggest businesses.
He's always trying to find opportunities that could deliver strong performance over the long-term. His preference is to hold a business forever, if it makes sense to.
One business that Berkshire Hathaway owns is Borsheims Fine Jewellery. This shows that Warren Buffett doesn't mind being invested in jewellery retailing.
Lovisa is making progress around the world, with its store count increasing in various countries. This is helping the company's profit margins and overall bottom line.
I think there is plenty of scope for the business to add hundreds of more stores around the world in the coming years, which suggests to me it still has a lot more overall potential. Warren Buffett would appreciate the level of possible growth, in my view.
I also believe he'd like how easy it is for Lovisa to grow. Due to the fact that its products have a low cost, it's very easy for the company to open a new store and to start adding profit in a capital-light way. Leasing a store doesn't take as much capital as buying real estate.
Some investors may be concerned about the impact of US tariffs on its US earnings, but the broker UBS thinks there are a few mitigating factors:
The broader impact on demand is the key uncertainty. Potential mitigating factors for LOV vs other impacted companies are: (1) all peers source from the same countries; (2) gross margins are high so the $ gross profit impact is modest; (3) the low price point means the $ price impact is low and demand could remain resilient; and (4) the LOV customer base is broad but skews to teens & younger adults, who tend to have fewer cost of living pressures.
According to the forecasts on Commsec, the Lovisa share price is valued at 34x FY25's estimated earnings and 22x FY29's estimated earnings. While investors would prefer to buy Lovisa shares at a cheaper price than it's currently trading at, I think there's the potential for most investors to like the stock, including Warren Buffett.
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