US and EU sales boost Warpaint London despite weak UK

By

Sandra Halliday

Published
Sep 18, 2019

UK make-up specialist Warpaint London, which makes the W7 and Technic brands among others, has reported rising sales with the six months to the end of June seeing turnover up 2.9% to £18.9 million. 

While UK trading was challenged, importantly, international group revenue increased by 7.8% to £11.1 million. That came as the W7 brand delivered continued export like-for-like sales growth in the EU (+12.4%) and US (+45.4% when the acquired business of its American distributor LMS is treated as if it were part of the group a year ago).

But it wasn't all good news as the gross profit margin fell to 34.9% from 36.5% due to the impact of those US sales having lower margins. With American sales factored out of the equation, the gross profit margin actually improved to 37.8%.

Adjusted profit from operations was £1.2 million in H1 2019 before exceptional items and amortisation costs, which was down sharply from the £2.6 million of a year ago. The difference was largely accounted for by various one-off factors, as well as by increased marketing spend and the lower margin.

On an upbeat note, the company said that Retra (the business it acquired in November 2017, including the Technic brand) achieved break-even EBITDA, an improvement on the £0.5 million loss of a year ago.

Warpaint said its international growth strategy is “in place and delivering” and action has been taken at Retra to reduce costs and improve new product development. The improved Christmas order book to be delivered by Retra underpins its optimism.

Joint CEOs Sam Bazini and Eoin Macleod said: "In a challenging retail market, particularly in the UK, the business is showing resilience and adapting to the changing market conditions, increasing international sales and seeing an improvement in the performance of Retra.

"Now that LMS is part of the enlarged group this has accelerated our growth into the largest colour cosmetics market in the world and provides useful dollar-based income. The cosmetic brands remain the primary strategic focus of the group, with significant sales of Christmas gifting being delivered in the second half of the year.”

That's good news coming after a six-month period in which W7, the brand that accounts for 54% of its total sales, saw revenue down 11% in the first half due to tough conditions in Britain. The company also said that it has implemented a strategy in the UK that it believes will increase sales of the W7 brand over the medium term.