Warpaint London sales and profits fall but outlook is brighter
Beauty manufacturer and brand owner Warpaint London said on Wednesday that the first six months of the year saw its sales falling 29% to £13.5 million as a result of Covid-19 restrictions in the UK and internationally.
That said, the W7 and Technic owner said UK revenue fell a smaller 12% to £6.8 million. International revenue was the big problem with a 40% plunge to £6.7 million.
However, the gross profit margin increased to 35.1% from 34.9% and it still managed to make an adjusted operating profit. It made £0.4 million, down from £1.3 million a year ago.
It had more good news too, saying a core range of 100+ W7 products initially displayed in 56 Tesco Extra stores across the UK has now increased to 190 products. Additionally, an impulse range has been developed and is now on display in 41 Tesco Express stores, taking the total number of Tesco stores selling its product to 97. Sales in those stores “have exceeded the directors' expectations”.
And roughly 100 exclusive Body Collection branded products are now stocked in 355 Wilko stores and over 115 different Technic branded products are stocked in 189 of the shops. A range of Technic and Body Collection gift sets will be stocked in Wilko from October 2020 for the Christmas shopping period.
Also looking at Christmas, despite Covid-19, its Retra brand has a “significant Christmas order book underpinning H2 outlook”. Retra's order book was £8.4 million at 30 June, which is lower than the £10.1 million of a year earlier, but is still strong.
The company said it has taken action in the US at its LMS unit to reduce its cost base, improve margins and provide a full range of group products and brands.
And the firm’s expansion strategy continues “with active discussions being held with additional major retailers in the UK and overseas”. It has also accelerated its UK and US online strategy.
It all means sales for H2 “have recovered well after the Covid-19 lockdown and are steadily approaching the company's monthly budget levels set for 2020 prior to the Covid-19 pandemic”. For the eight months to 31 August, it had unaudited sales of £22.8 million and adjusted profit from operations of £0.7 million.
The company’s current expectation is that sales for the year will be approximately £37 million, which should generate adjusted profit from operations “in excess of £2 million”, on the assumption that there’s no material decline in trading conditions as a result of additional Covid-19-related lockdown measures nor any adverse exchange rate movements.
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