I would now like to hand the conference over to Mr Shane Fallscheer, Managing Director. Please go ahead.
Thank you. Good morning, everyone. Thanks for taking the time to dial in. On the call today, you have myself, Shane Fallscheer, Managing Director, and Chris Lauder, our CFO. As you're aware, we published our full year results to the ASX this morning, so we would like to talk you through them. I will now do a page turn through the presentation, and we're happy to take any questions at the end. If we turn to page five, we can talk through the detail of our results. We had a challenging start to the financial year, with markets going through various stages of temporary closure due to the impact of COVID. As we moved through the year, we saw an improvement in sales to deliver total sales growth of 18.9% year-on-year.
This reflects growth in the store network whilst being offset by a significant number of trading days lost due to temporary store closures caused by COVID across all markets. Comparable store sales for the year were up 8.1% as compared to FY20, after delivering negative 4.5% for the first half, with strong positive comps for the period throughout the rest of the year. Our cost of doing business was well managed, finishing at 56% for the year, delivering a full-year EBIT which was 39% up on the prior year to AUD 42.7 million. This is excluding the impact of the new lease accounting standard. For the sake of clarity, all of the numbers we will talk to today and included in our presentation are after removing the effect of the new accounting standard, so that they are more easily comparable with prior years.
Our global rollout remains a key focus, with a net 109 new stores open for this year. This is including the 87 stores acquired and converted to Lovisa as part of the Beeline acquisition during the second half. This has assisted in fast-tracking our European expansion and complementing the continued growth in our U.S. network, with 63 stores trading in that market at year-end. Cash flow from operations was AUD 66 million and cash conversion at 110%, reflecting tight cash flow management and inventory control, as well as the impact of continued rent deferrals. At year-end, we held AUD 36 million of cash and no debt. As a result, the board have announced a final dividend of AUD 0.18 per share to be paid in October. Now if we turn to the financial overview on page six.
As I noted earlier, revenue for the period was up 18.9%, with comparable store sales up 8.1% on FY 2020. Gross margins were slightly lower, with CODB well managed to come in well below last year at 56% to sales, and this resulted in our EBIT being up 39.4% to AUD 42.7 million. Pleasingly, despite the continued disruption to our business throughout this period, we were able to finish the year with a very strong balance sheet position. If we turn to page seven, we have tried to make the impact of COVID on our store network clearer for you. As you can see, our store network was impacted by a number of temporary closures during the period, with the Victorian market closed for approximately three months from August to October, followed by closure periods in the U.K. and France during the period from November to April.
As you would be aware, we've unfortunately seen a return of lockdown since the end of the financial year in our Australian and New Zealand markets that I'll talk to later. If we turn to page eight, we've spoken to the sales impact from COVID, and whilst our sales for the first half were down overall, we did see an improvement in our sales trends through the second half, delivering positive comparable store sales for the financial year and overall sales growth of 18.9%. Pleasingly, as you can see, our sales trajectory has returned to the levels seen prior to FY20, despite the continued challenges faced during the current year.
As we've said previously, the store closures we have had to deal with over the past year have given us a strong impetus to drive online, and the investment made in our digital platform has helped us to offset some of the lost sales from our physical stores. With total online sales up 178% on the prior year. On page 9, you will see our sales by region. The first quarter of the financial year was heavily impacted by temporary store closures in Victoria, Australia, as well as weakness in most global markets. With Victorian stores reopening in the second quarter and most other markets showing improved performance, we saw positive comparable store sales after the first quarter as mall traffic began to return to normal.
This was then again negatively impacted in the Northern Hemisphere as COVID cases began to increase and temporary store closures were again put in place, with the U.K. in particular suffering from closures in November, and then again in the period from late December through until mid-April. The French market also suffered from an extended temporary closure period from February through to May, and Malaysia was more recently temporarily closed in June this year. These closures had a significant impact on trade. However, pleasingly, sales improved after the first quarter and have generally been stronger across most markets when stores were able to open for trade. In particular, the Australia-New Zealand region has grown total sales for the year by 26.7%, and South Africa growing by 19.3% on FY20.
Sales in our Asian markets continued to be slow to recover as a result of low tourism and local movement restrictions in place, resulting in lower foot traffic throughout the malls. The increased store network in the U.S. and the loosening of restrictions across the course of the year has also helped that market grow sales by 83% on the year prior. Turning to page 10, gross profit was AUD 221 million at a 77% gross margin. Slightly down on last year, which is a solid result given the impact of increased freight costs during the year, combined with the decision to maintain high levels of inventory provisioning at the end of the year as a result of the current challenges being faced with temporary store closures. If we turn to page 11, we'll talk to our cost of doing business.
A strong focus on store wages during the year enabled us to deliver a lower store wage percentage than the year prior, which was pleasing given the number of temporary store closures that we faced throughout the year. A tightening of support cost structures implemented in FY20 to combat COVID also helped us to keep our cost of doing business under control, and this also helped offset significantly higher logistics costs that we both have and are being challenged with, as well as the impact of one-off costs associated with the integration of our Beeline acquisition. Additional to this, we've been able to negotiate improved rent terms as well as rent abatements across a number of our stores during this period that also contributed to our solid cost of doing business outcome. I'll now hand over to Chris Lauder, our CFO, to talk through cash flow and the balance sheet.
Thanks, Shane. Turning to page 12, you will see that despite the ongoing disruptions to our business and associated lower profits during the period, cash flow was again strong, with cash from operations before interest and tax of AUD 66 million for the year, operating cash conversion of 110%. We were able to again keep tight control over our working capital, with inventory well managed despite significant investment made in inventory to support the conversion of Beeline stores to Lovisa in the second half, and stock purchases to support our new warehouse in Europe and online 3PLs. We also saw continued rent payment deferrals in some markets arising from situations where we have agreed such deferrals with our landlords, as well as where rent has been withheld or moved to being paid in arrears rather than in advance, pending finalization of abatements.
Capital expenditure for the period was AUD 14 million, predominantly from the conversion of Beeline stores to Lovisa during the second half, as well as new store fit-outs and refurbishments on existing stores on lease renewal. This represents a reduction on prior year CapEx spend despite opening more stores overall, with 22 full new stores built for the year compared to 66 stores last year, with the remainder of store growth coming from the Beeline acquisition in Europe, with the 87 stores converted requiring significantly less CapEx spend per store than a full store fit-out.
In addition to the above, as part of the Beeline acquisition, we received €11.8 million in cash under the terms of the acquisition, which, combined with the items I mentioned earlier, helped to deliver closing net cash of AUD 36 million, a AUD 15 million increase on the position at June 2020, with no debt at the end of the period. Turning to the balance sheet on page 13, you can see that it remains strong, which has allowed the board to announce a final dividend of AUD 0.18 per share payable in October, franked at 50%, taking the full year dividend to AUD 0.38 per share, reflecting the strong cash flow position for the year. You'll recall that in prior year, the board elected to defer the payment of the interim dividend, which was ultimately paid in September 2020, with no final dividend paid in relation to FY20.
It's pleasing that our strong balance sheet position has allowed us to return to the payment of dividends and distribute surplus cash generated during the year to shareholders. As we've said previously, the board will continue to assess dividend levels each half year 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 does not currently have a specific dividend payout ratio and will 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 Shane.
Thanks, Chris. If we turn to page 14, a quick update on store numbers. The key driver of future growth for Lovisa continues to be in our international rollout. With 72% of our store network now trading outside of Australia. We finished the period with 544 stores trading, with a net 22 new stores opened for the year in our existing markets, plus 87 new stores via the Beeline acquisition in Europe that have now all been converted and is trading as Lovisa stores. We are very excited with the addition of six new European markets, providing a strong base for further growth in the region on top of our existing U.K. and French markets.
The rollouts in the U.S. and France continued throughout the year, and whilst this slowed as a result of the COVID disruption, we now have 52 stores trading in France, with nine new stores opening in the year, in addition to the 22 stores acquired from Beeline. In the U.S., as at end June 2021, we are now trading from 63 stores across 15 different states, and we will continue to open stores in this market. During the financial year, the contract with our Vietnamese franchise partner was terminated and the stores closed. We continue to see this market as an opportunity for Lovisa, and we'll continue to seek further opportunities.
We don't forecast anything in this market to take place in the short term. The pace of our organic rollout in existing markets slowed during the year as a result of the COVID disruptions and the focus on landlord negotiations on our existing portfolios. Focus more recently has returned to new opportunities, and we continue to work closely with landlords in relation to new stores in all markets and appropriate rent structures to manage current economic risks. Turning to page 15, I'll talk to the progress we have made in recent times in relation to the digital business. The focus on our digital capabilities accelerated during the initial COVID lockdown period in FY20, delivering strong sales growth, which has continued throughout FY21, with total sales growth of 178% for the year.
We now have websites servicing all of the company-owned markets we operate in, including the new European markets we've entered recently via the Beeline acquisition. We have also improved our customer focus with 24/7 live chat, improved social influence programs, and improved order fulfillment capacity with the implementation of dedicated online fulfillment warehouses in the U.K., U.S.A., and South Africa, and our new European warehouse that we established in Poland to service our European stores and digital customers. The digital channel remains an important part of our global strategy, critical to providing our customers with the full range of our shopping options that they require. We continue to invest in support structures to drive ongoing growth in this area and remain focused on maintaining the profitability levels of our online sales. Turning to page 16, I will now talk in more detail around the Beeline acquisition we announced in November.
As previously announced, the acquisition was due to be completed between March and May 2021, which occurred as planned, albeit with most of the acquired markets in lockdown at time of handover. This acquisition brings us six new European markets, being Germany, Switzerland, Netherlands, Belgium, Austria, and Luxembourg, as well as acceleration to the existing rollout in France. The purchase price for the shares in the Beeline retail companies was EUR 70, with EUR 11.8 million of cash in the acquired business at handover, effectively meaning that Beeline paid us that amount to take over the store network. Of Beeline's 114 stores at the date of signing the agreement, we've converted 87 stores to Lovisa, with the remaining stores already closed as they weren't deemed suitable for Lovisa to trade.
At the time of handover, and as a result of COVID lockdowns in most of these markets, we experienced delays in being able to trade these stores, as well as disruption to normal trading once these stores opened. However, more recent sales performance has been pleasing as restrictions have begun to relax. To manage the larger European business, we have strengthened our support team in both the Melbourne support office and in our new support office in Cologne, Germany to provide localized support, and we envisage that this support office in Germany will continue to grow as we expand across Europe. The acquisition was cash flow positive immediately, with the acquired cash of €11.8 million offsetting our implementation costs with aggregate CapEx and working capital investment of around €6 million.
This transaction provides a strong base to accelerate growth in Europe, taking our European store network to 158 stores, and we're excited by the opportunity this provides us to expand into a number of new markets at pace. On page 18, I'll talk to the trading update and outlook for the coming financial year. Trading for the first eight weeks of FY 22 has seen continued strong sales in markets where COVID-related restrictions are low and stores are able to trade, with comparable store sales for this period at +37.8% on FY21. Total sales for this period are up 56% on the same period year-on-year. The first eight weeks of this financial year have again been impacted in some markets with temporary lockdown, with 106 stores currently closed, including 82 in Australia and 24 in New Zealand, and the Malaysian market only recently reopening after a 10-week lockdown.
We continue to focus on opportunities for expanding our store network. However, progress in our new store openings may be slowed in the remainder of calendar 2021 due to logistics capacity challenges around the world. These capacity issues may restrict the volume of new store fit-outs that we require to be shipped around the world to open our new stores. Our store network is currently at 551 stores, and our balance sheet remains strong with available cash and debt facilities supporting continued investment in growth. As a result of the current uncertainty in the global economic environment, we're not in a position to provide any further information in relation to an outlook for our business. In summary on page 19, our sales levels have shown a solid recovery since the first quarter.
Some markets continue to remain heavily impacted by COVID, and most are subject to some form of ongoing disruption. We are pleased with the progress we have made with our digital business, increasing contribution from online sales, and we're also able to control our cost of doing business well during the period, which has enabled us to continue to invest in building a platform for future growth across both physical and digital channels.
Our international expansion continued through the period, with 22 net new stores opened on top of the 87 new stores acquired as part of the Beeline deal, allowing us to accelerate our European expansion and enabling us to launch into six new markets all at once. Our continuing strong balance sheet position has allowed for the announcement of a final dividend of AUD 0.18 per share and leaves us in a strong position to again move forward with our growth plans. With that, I want to thank you for your time today, and we are happy to take any questions.
Thank you very much, sir. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel the request, please press star two. If you are on a speaker phone, please pick up your handset to ask your question. Please hold momentarily to assemble the roster. The first question comes from Sam Teeger from Citi. Please go ahead, Sam.
Can you hear me okay?
We've got you now, Sam.
Oh, thanks. How many stores have you opened to date in FY 22?
Uh-
One in a bit month or less two month.
I mean, there's 551 now and we had 544.
Okay
The same year, seven.
Okay, cool. In note B7 of the accounts, what's driven a doubling of accrued expenses to AUD 20 million? Is it fair to assume that's primarily rent deferrals, which are still due? On the subject of just landlords, what proportion of abatements have you extended tenures and roughly what would be how long the extensions are?
I can cover the first part. I'll let Shane cover the second part. The accrued expenses, yeah, you're right. A big chunk of that is accrued rent. It's also got a bit in there from the Beeline acquisition, so what we've taken on as part of those companies. Just that natural increase there, but yeah, a big chunk of it is rent that is accrued, still got to be paid. Sam, I think your question was how much of the abatements are ongoing. Is that right?
I mean, given there's some deferrals, of the stores you've come to terms on with landlords, what's the mix between abatements and deferrals and where you've agreed on abatements, what proportion of them have you extended at least 10 years and roughly how long would the extensions be?
Right. Yeah, there's probably no easy answer to that with the amount of countries we operate in because every country is basically being dealt with individually. I'm not going to be able to give you exact numbers, but very roughly speaking, very few leases have been extended to gain any rent subsidies or rent deferment. We've tried to deal with everything within the current lease format. Again, conscious that as we're probably all feeling that the new surprise and disappointed that we're still in the middle of COVID, nearly two years in. We've been reluctant to extend any leases on current terms to ensure that the business is in the best position to continually move with the challenges that are presented with it. To achieve some abatements in the U.K., we moved some leases out.
As a general term, we've basically done deals under current terms and structures. Then as the markets have returned to normal, most of those have dropped away. Needless to say that we're probably back at the table in Australia and New Zealand with the challenges that have taken place in the last couple of months.
Got it. Just last question. I think the AUD 11.8 million of grant income, what proportion relates to Australia?
We're not breaking it down by country, Sam.
Is it fair to say the bulk is Australia?
I mean, we've got a reasonable amount from other countries around the world because obviously some of the other markets were in lockdown for periods of time. I mean, most of that was all in the first half. Yeah, I mean, obviously a sizable part of that number was Australia, but we're not going to break that down.
Right. Thank you.
Thank you. The next question comes from Mark Wade from CLSA. Please go ahead, Mark.
Thank you. Good morning, team. Look, you've entered a lot of new countries during the period. I was first of all curious to know what you've seen across the customer response to that, I mean, other than the straightforward result around sales, but just how have those customers responded and how you've been able to improve the awareness in those regions. The reason I ask is you look at some of the Google Trends figures and, I mean, it's just gone off the scale in places like the U.S. and parts of Europe that have reopened. Something seems to be working. Can you talk us through what you're seeing on the ground?
Sure. Just to recap, as we entered these new markets, disappointingly, we took possession of those stores through March, April, May. At that stage, we negotiated the contract, thought we'd be able to open the stores, but we opened those stores into lockdown in a number of markets. Technically, we took over the stores and they were forced to remain closed. It's been reasonably well documented the different challenges in most of the European markets they've had with COVID and dealing with the restrictions differently. Probably what I'm trying to articulate there is some markets bounced out when we opened well, and they were the ones that probably had less impact over COVID. Luxembourg, Belgium came out strong. France came out strong. Different waves of COVID have sort of slowed that.
In general terms, our typical customer around the world is the same around the world, which is what's led to the positive response that Lovisa sees in each new market that we open. A girl in her 20s sees a new fashion jewelry store full of beautiful pieces of jewelry, then they're attracted into that store as they are anywhere else in the world, and we're getting very similar sales trends and responses. We do see some mix in sales patterns for different markets and what the customers are buying as we ebb in and out of lockdown. As we came out of lockdown, we saw a strong surge in higher fashion items, bridal items, and all of the accessories that you would imagine our customers are buying when they can start getting out and socializing again.
As we get closer to lockdowns, we see the trends move back towards more everyday wear products. Those trends are reasonably consistent around the world. I suppose the summary of your question is.
the thing that has seen Lovisa succeed in the markets that we've entered is the customer base, being female customer, attracted to our stores and wearing fashion jewelry in all of the markets that we operate in. We're seeing similar positive results.
Okay. Fair enough. Just on the other side of the coin, and just how you've been able to manage internally, just the complexity as you're now approaching 20 countries. You mentioned the German support office. I'm just curious to really delve into what kind of processes are in place in that office to really help manage the expansion.
Probably the two big parts that we had to establish at pace is we established a warehouse that is managed through a third-party vendor, being DB Schenker, which is one of the world's largest logistics providers. We established a warehouse in Poland, which is one of the lower cost markets that enables us to get product into our stores within 24 hours-48 hours across Europe. That was established to support the back end of being able to deliver product into our stores in a just-in-time format. That was one of the first triggers. Then second to that, being that the Beeline business was based in Cologne, Germany, which is a reasonably central city to get across Europe, and we took over some of the Beeline team. We elected to basically pick up where they left off.
That helped us establish sort of a cornerstone support structure in Germany to support Europe, and we've built off that. We've hired a senior executive or a number of senior executives that are now based in Cologne, Germany. Some of our team have moved over to Cologne, Germany, moved out of the U.K., some expats that we had living there. We're sort of doubling down our resources in Germany and we foresee, at least for the next year or two, that we'll continue to build out that office in Cologne to be a support structure for Europe. Things like payroll, finance, loss prevention, recruitment, HR practices that typically, when the markets were smaller, were being largely managed out of Australia. Those divisions have all been moved over to Europe and are being managed out of Europe under a European team.
We are starting to see some decentralization of some of our resources as we get bigger, because again, as much as most of those countries fall under the EU, they've all got their nuances, especially in HR, and management of teams and so on. We're doing that out of Germany.
Okay. Well, really appreciate those insights, guys, and impressive recovery. Well done.
Thank you.
Thank you. The next question comes from Julian Mulcahy from E&P. Please go ahead, Julian.
Hi, guys. Just one question or a couple of questions. First one on rent. Are you expensing at the current agreements, although you might be holding back rent because of some negotiations going on?
Yes. Unless we've signed a deal to get a lower rent or some sort of abatement, we recognize the full amount of rent under the lease.
Right. Okay. In terms of the higher freight costs, you have historically air freighted goods around. Is it getting access to flights or has there been a kind of dramatic increase in actual pricing?
Both. Both shipping and air. Look, the positive for Lovisa is being that we fit a lot of product in a box and/or pallet and/or container. The cost per piece inflation at the moment is real, but due to our low cost of goods, we can absorb that. Again, we're moving the product around. We're moving a lot in a small metric volume of space. Basically, it's more expensive to get our product on planes and significantly more expensive to move product, in both time and cost, through shipping containers. That's all well documented across all industries. There's the cost issue, and some of those containers are costing us 3x and 4 x as much as usual. On top of that, there's the time issue, that there's just huge backlogs in ports around the world.
The delay in getting things into containers and/or on planes and getting them off. The shipping's worse. There's some real challenges there. From everything we're seeing and reading and analyzing, is that this will run into Chinese New Year before we see any real catch up, I suppose, around the world.
Okay, cool. Just on the store rollout. I get the logistics issues at the moment. Over the next sort of 12 months - 18 months, is it going to be mainly the U.S., or are you ready to also start expanding the Beeline network?
We've got leasing teams on the ground in the U.S. and Europe, and we're actively looking at sites in all of the current markets that we operate in. We're actively engaging in new deals in all of the Beeline markets. Albeit that, France is a known market to us. We're filling in the gaps between Austria, Belgium, Luxembourg, Switzerland. Germany is another large market that we'll do probably go slightly slower in Germany just to ensure, because there's a big footprint of stores that have potential, but we just want to make sure we understand the market, before we sort of go to a fast rollout there. We're proceeding with caution in the new markets, continually filling in France and moving as fast as practical in the U.S.
With the rollout over the next 12 months, 18 months, do you think?
Sorry, I missed that question.
Will the U.S. account for most of the rollouts over the next 12 months, 18 months?
Yeah, in the next 12 months-1 8 months, off the top of my head, probably 60%, somewhere between a 50% and 70% split would be U.S.
Okay. Thanks, guys.
Thank you. The next question comes from Sam Haddad from Bell Potter Securities. Please go ahead, Sam.
Hi, Shane and Chris. Just on the store rollout. I know you are not providing guidance. Can you give any flavor on what a sensible profile would look like, given all the moving parts in terms of freight cost constraints and things like that and site availability? It sounds like the landlords are more focused on new sites. Just looking on those two sides of the equation, what you are seeing in terms of your pipeline.
Sure. We're back stating the obvious and that we can't really talk to numbers, but it's fair to say that in the last three months in particular, the landlords have moved out of COVID discussions, especially in the northern hemisphere, and started moving towards new opportunities. The dust has settled, so to speak, so the landlords know what vacancies they have, and they've become a lot more engaging in getting new deals and new terms done. I think all parties, being both retailers and landlords, have settled at where they think a fair and reasonable deal sits. Whereas prior to that, our expectations and landlords' expectations with so many unknowns, it was hard to join in the middle being that we weren't sure how long it would take in order for things to return to somewhat normal in the northern hemisphere, and the landlords weren't sure either.
As those two things seem to have calmed, touch wood, that's enabled in the last three months to start getting some traction again. Reminding everyone that the deals typically take longer to negotiate and get the stores open in the northern hemisphere with just the bureaucracy of permitting and all those things. Probably the bit we're flagging is some of the stores that we are still working towards opening before Christmas currently may be delayed because of the sheer shortage of containers and shipping ex-China. Unfortunately, Sam, at the moment, we're just not really in a position to give you the store numbers ballpark.
Okay. Just on Beeline, you mentioned that you're pleased with the recent trading. Can you give any sort of color on what the store metrics are looking like, where you'd like them to be, and how far off you are from those targets?
Not really. We're not in a position to talk to those details other than to say that we're pleased where we are, and we've got a long way to go as the turmoil of taking over a business in the middle of COVID, in the middle of lockdown and adopting a team and bringing them up to speed with what the service standards and the standards are of Lovisa and rebuilding a team would be hard at any time, and it's probably been doubly hard with the COVID lockdowns and being that the support crew in Australia that would typically have been based up in Europe to help transition this has all been done remotely. All that said, we're pleased where we are, looking forward to getting into Christmas with a clean run of stores open and trading.
Right. Just on gross margin outlook, including freight costs and things like that, what levers do you have to support gross margins, your hedge profile and other levers?
Yeah. Look, from a cost perspective, I'd like to think we run a reasonably tight cost ship anyway. We are reviewing retail pricing, that's just an inevitability that I think every retailer is looking at due to the cost pressures that are coming their way. Just reminding everyone that any price increases that we run through Lovisa due to the fact that we price our product individually, the cost versus benefit of repricing product on the shop floor isn't really there. It would basically take new products rolling through the business to affect any movement in our price increase strategy. That we do have one. You're probably not going to see any of that run through the business, at least prior to Christmas, show any meaningful change.
Right. Okay, thanks for your time.
Thank you.
Thank you. The next question comes from Charles Thorpe, who is a private investor. Please go ahead, Charles.
Oh, hi. Can you hear me okay? I have a problem with my speaker.
Yeah, now we are good.
Okay. I know we don't know when, but when we get to COVID normal, are you able to share aspirational store numbers for like a two years, three years and five years out? Or even 10 years? You must have those plans, but can you share? Thanks.
Yeah. No, we've never really given guidance on store numbers. Prior to COVID, we historically spoke to that we plan to open more stores year on year. That's probably been parked until we get through the sort of COVID challenges that we have. We're a growth business. The DNA in our business is to grow and expand our business around the world, and we intend to do that, but we're not in a position to give any sort of numbers looking out in advance.
Yeah. That's why I said aspirational. Thanks for that. If you could in the future, that would be very nice, especially for a long-term investor like myself.
Yeah.
Thank you. Bye.
Thanks.
Thank you. The next question comes from Angie Ellis from 8020 Invest. Please go ahead, Angie.
Hi, guys. Just congratulations on a fantastic result in very challenging times. Quite a few of my questions have been answered, but I just wanted to ask about the premium quality jewelry, like the black label. I bought a AUD 99 tennis bracelet to check it out and it's pretty amazing. I just wanted to know if you were trialing it in the other stores and just provide a bit more color on that.
Sure. Sure, Angie. We've spoken over the years that Lovisa's core competency is fashion jewelry and we'll continue to stay in that space. Part of continually trialing and looking at new ideas and new concepts in our business, we ran a higher end concept, basically a showcase cabinet in 5 - 8 of our stores around Melbourne Metro, just to get a feel for how that worked. We had mixed results, to be honest. We're trialing stage two or series two of that concept in the next month or so. Keep an eye online and so on, because that'll flag when that comes out. We did a trial of nine carat gold and some other things, and it didn't really do it for us.
It's probably not something we intend to continue with, but that's just a continual trialing that we run across the business. We learned some lessons. We intend to keep the lockable cabinet in a series of stores and try some different products. We're just going to rotate different products through that cabinet and find the sweet spot that suits our business. Thanks for being up with that and seeing what we're doing.
Yeah. I like the fact that you do that you trial these interesting concepts just in a few stores or online and just see how they go.
Yeah.
I was going to ask too about the store size with those Beeline stores in Europe. How does the store size compare, say with U.S. and Australia?
Yeah, very similar. The thing that was very attractive to us for Beeline is, I wouldn't be able to quote you the exact average dimension, but it's very much within our sweet spot. It's been discussed over the years that one of our challenges to continue to open stores in that 50 sq-60 sq m mark that is the right size for our business. Those stores well and truly sit within that. We've been challenged with some of the smaller stores in the sort of German train stations and French train stations that are smaller than our average, but we've been able to flex down to there and learn a lot of lessons as well. Again, the pleasing thing is that the thing that made that deal so attractive to us was that the footprint of stores is right within that sweet spot of Lovisa.
Yep. Well done, guys. Thank you very much.
Thank you.
Thank you. The next question come from Wilson Wong from Jarden. Please go ahead, Wilson.
Morning, guys. Just in terms of the comp sales growth in the first eight weeks of FY 2022, what's been the composition of this regionally?
I tend to break down our comps by region, Wilson. I think it's probably fair to say that. Well, just maybe to start with the comps that we're talking to there, just to make sure everybody's clear, exclude the impact of markets that are closed. That doesn't reflect the Australian, New Zealand stores that are in lockdown, for example. Yeah, it's a pretty consistent position to what we saw that year. If you're looking at the total sales performance that we call out through the presentation, it'll give you an indication of where the strong market is.
Sure. That's clear. Just in terms of the online sales growth, it seems to have slowed in the second half as the reopening of economies occurred. Do you expect this mix shift to continue over the near term?
I think from our point of view on digital, we're coming off such a low base that as much as the % are good, that dollars, they're becoming more meaningful now. Yes, we do see an upside. We'd rather have stores open, put it that way, but we do see an upside when we have store closures, especially in the markets where our brand is well known and we've got a solid base of online customers, then we see the upswing when the stores unfortunately go into any sort of lockdown. In very simple terms, the more established the Lovisa brand is in each market is the better upside we're seeing in the sort of sales volumes on the online business.
Because our base is low, I'd like to think as we move out of the lockdown scenario, that we'll continue to achieve strong growth in this arm of the business.
Right. Is part of the preference, I guess, just in terms of the unit margins for online sales. How do you think about the margins for orders over AUD 60 where free shipping is provided?
We're a high-margin business to start with, so we can probably absorb some of that. Again, the transaction value as it's higher online, we can carry some of that freight cost into the business. There's a different P&L for a digital business, so to speak.
Yeah.
What we've said historically in a store closes, we want that business to be as profitable as the physical stores. That's the objective.
Right. Okay. Just my last question is just around the integration cost for Beeline. Can you give us a sense of how the rebranding process has been over the period?
Yeah, the rebranding process, it was tough, being honest. 87 stores in lockdown with all of the different restrictions, with trade people on site and all of those things. Yeah, it wore a few people out to get that done. The positive is we're done, we're trading. Swapping out tools and all the things that, the sort of small stuff that we take for granted across all of those markets in a lockdown environment. In a weird way, any hiccups we had, we probably could cover those whilst the stores were closed in COVID. Yeah, it probably extracted a cost on some of the team that ran pretty hard to get that done. A lot of late nights with a lot of people.
The positive is as we came into June, July, the heavy lifting is behind us, and now it's about refining that business and maximizing it.
I know it's still early days, but with the rebrand, have you seen the same customer base of Beeline sort of carry through the new brand?
Yeah, look, there's some ranges that we probably don't talk to range performance for sort of IP reasons. We're seeing different trends in different ranges that still the collective all add up to the number that we're looking for. The product mix is different. Again, the thing we do see across Lovisa is as markets come in and out of lockdown, that the sales mix and the mix within the business does change to where our customers are wearing their products.
Right. Just on the integration cost for Beeline, are you able to disclose, give us a sense of the size of that?
We're going to talk specifically to the actual dollars for integration cost. There's a number of different buckets there of cost. There's cost of doing the transaction, putting the team in place to actually manage the market before we had the stores open, obviously, once we'd taken the stores on and we couldn't open them.
We were still having to pay rent and wages in a lot of cases. It certainly did have an impact on CODB in the period. The depression of the acquisition costs themselves were huge, when you add it all up, it certainly did have a drag on the numbers for the year.
Sure. Thank you.
Thank you. The final question comes from Sam Clarke from Moelis. Please go ahead, Sam.
Hi, guys. Great result. I just wanted to clarify, you were just talking about store sales for this period, and you mentioned comp store sales, 37.8. That's obviously including lockdown closures. The 56%, that's the total across the group, right? That's not excluding any kind of regions that have experienced lockdown in that period?
Yeah, that's right. Just to clarify the comp number, that's only the comp sales for stores that were trading. If they were subject to a temporary lockdown because of COVID, we removed those from the comp. Does that make sense?
Yeah, great. Thank you.
Sam, does that conclude all your questions?
Yeah. That's great. Thanks.
Thanks.
Thank you. Thank you. There are no further questions at this time. I will now hand back to Mr. Fallscheer for closing remarks.
Thanks, everyone, for the questions and for dialing in. I know you've got busy mornings this time of year, so I appreciate taking the time and showing interest in Lovisa, so thanks again. Bye-bye.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.