Lovisa has quashed plans to expand across Spain.
The announcement comes after it revealed its trading performance for the financial year.
Digital sales have bolstered Lovisa's trading through the COVID-19, with the jewellery retailer reporting 256% growth on the prior year in Q4.
Due to the significant disruption caused by the pandemic, Lovisa's sales revenue (excluding franchise revenue) for the full year ended 28 June was $237 million compared to $249 million in FY19.
Comparable store sales for the period since the stores have reopened - based on actual days each store traded - were down 32.5% on last year.
During the period, Lovisa's further expansion in Spain was put on hold as stores closed across the country.
Lovisa reports that while the business saw some improvement on performance before the lockdown, it was disappointed with the lack of support from the landlords in Spain.
As a result, the Board has decided not to reopen the stores in Spain and will exit the market.
Due to this exit, the business expects to recognise an impairment charge alongside associated provisions against the business of approximately AUD $3.3 million in FY20.
In other markets, Lovisa continues to hold discussions with landlords regarding rent subsidies and abatements for its current portfolio of stores, lease renewals and new store opportunities for both the closure period and the future.
Over the period, the business had to stand down its store teams in all markets and had to enact some permanent redundancies.
Lovisa has since reinstated the majority of its team, despite not seeing sales return to pre-shutdown levels.
In a statement, Lovisa said that it is in a good position to emerge from the pandemic.
"Our centralised operating model has allowed us to effectively manage both the temporary closure of our stores as well as the challenges associated with re-opening the business over recent months.
"This puts is in a strong position to manage our global business despite the disruption in the ability of our team to travel.
"As a result of the decisive action taken on costs and cash management since the outbreak of COVID-19, the company's balance sheet position remains strong with inventory level well managed and net cash at financial year end of $21 million, compared to $11 million at June 2019 and $13 million at December 2019.
"This combined with undrawn facilities of $44 million, leaves the business well placed to invest in future growth opportunities as the global economy emerges from the current situation," the business said.
The Board also advises that John Armstrong has resigned from his position as a director of the company, which came into effect on July 03.
A search is underway to find a new director.