Warpaint London reports substantial rise in first-half sales

Colour cosmetics company Warpaint London reported a substantial increase in its first-half sales on Tuesday after expanding its branded product sales.

The AIM-traded firm said sales surged 46% to £36.7m, as the UK market saw a revenue increase of 28% to £13.3m, while international sales jumped 58% to £23.4m.

Its gross profit margin increased to 39.1%, which it put down to the efficient handling of ongoing supply-side inflation.

Adjusted EBITDA for the six months ended 30 June reached £7.9m, while the statutory profit from operations stood at £6.3m.

As of the end of June, the company held a cash reserve of £7.1m, with no existing debt.

Its statutory basic earnings per share also rose to 6.22p, while the board declared an enhanced interim dividend of 3p.

Looking at its operational metrics, Warpaint reported a marked sales increase across all its geographies: the UK at 28%, Europe at 56%, the US at 83%, and other global markets by 53% year-on-year.

The W7 and Technic brands experienced sales growth of 67% and 37%, respectively, while Technic introduced 158 of its products in four Asda superstores for trial, setting the stage for Asda's cosmetic range review in the fourth quarter.

Online sales significantly accelerated, especially in the UK, EU, China, and the US, with a rise of 212% in the half-year to £2m.

The company's US expansion strategy was especially impactful, with promising initial sales at H-E-B stores, CVS BeautyIRL stores, and new launches at Sallys Beauty Supply and Nordstrom Rack.

Since the end of the period, Warpaint London said it had continued to maintain its upward trajectory.

With group sales for the eight months ended 31 August at £54.5m, the company said its expansion strategy was well underway.

That included the roll-out of W7 products in an additional 200 New Look stores in the UK this year and the launch of the W7 brand in 73 Superdrug stores in September.

The company said it was looking forward to further launches and an expanded product range with new and existing retailers, especially in the UK and US markets, in the second half and in 2024.

“I am delighted with the group's continuing strong performance in the first half of 2023, with a record level of sales and profits delivered,” said chief executive officer Sam Bazini.

“I believe the group is very well positioned to achieve further growth, and I remain confident that margins can be maintained going forward.

“Warpaint is a global business with the capacity, expertise and strategy, coupled with balance sheet strength, to drive future growth from both our existing and new customers.”

Bazini said that while the firm was experiencing good growth in the UK, he was “particularly pleased” with the growth being seen in Europe and the US.

“As in previous years, the group's sales are expected to remain second-half weighted, reflecting Christmas seasonal sales as well as ongoing momentum.

“We look forward to updating further as the year progresses, and with significant opportunities for continued growth, both already secured with our existing retailers and in discussion with additional major retailers globally, I am confident that the group will continue to perform well for the remainder of the year and beyond.”

At 1101 BST, shares in Warpaint London were down 0.75% at 300.24p.

Reporting by Josh White for Sharecast.com.