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Warpaint London

Warpaint London plc Seeing strong growth in overseas sales

Warpaint London plc (LON:W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands, provided today a trading update for the year ending 31 December 2018.

As stated in the Company’s interim results for the period to 30 June 2018, the outturn for the financial year is heavily dependent on second half trading. Sales in our international territories, in particular the USA and the EU (excluding the UK) have remained strong and we continue to see significant growth in these areas. As at 30 September 2018 Group sales to the USA were up 60% compared to the same period in 2017 (up 74% in US$ terms) and sales in the EU (excluding the UK) were up 13% year on year. We are also pleased to have recently made our first domestic sales in China from our newly established Chinese trading subsidiary and to have made the first Group sales into Russia.

However, the UK market, as highlighted in our interim results, remains challenging. The UK market, which accounted for 44% of Group sales in the first half of the year, has seen further softening recently, with retailers reducing stock levels and Christmas orders. This reduction in previously anticipated UK sales will have an impact on Group performance for the full year that will not be completely offset by better than anticipated performance in our major overseas sales territories.

Based on current expectations the Company’s board anticipates that revenue for the year ending 31 December 2018 will be in the range of £48 million to £52 million. Consequently, the Company’s board currently expects profit before tax for the year ending 31 December 2018 (excluding amortisation in connection with acquisitions and exceptional items, which total approximately £2.5 million) will be in the range of £8.5 million to £10 million.

The reported level of profitability for the full year will be crucially dependent on the precise product and geographic mix of sales for the remainder of the year, the busiest period of the year for the Group.

Commenting, Sam Bazini and Eoin Macleod, Joint Chief Executives said: “Whilst the current UK market conditions are challenging we are seeing strong growth in our overseas sales. We remain well positioned to take advantage of any improvement in UK market conditions and will continue our strategy of growing and diversifying our international sales. Warpaint is a profitable and cash generative business that is well positioned for continued growth and the maintenance of our progressive dividend policy.”

Warpaint London plc is a colour cosmetics business, based in Iver, Buckinghamshire. It is made up of two divisions: close-out and own-brand. The second and larger own-brand division primarily consists of the Group’s flagship brand, W7, together with the Technic, Body Collection and Man’stuff brands acquired through the acquisition of Retra Holdings in 2017.

W7 is an extremely creative, design-focused cosmetic brand proposition with a focus on the 16-30 age range, delivering high-quality cosmetics at affordable prices. The W7 brand has grown organically since its inception in 2002 and now contains over 700 items which are sold into high street retailers and independent beauty shops across the UK, Europe, Australia and the US. In 2017, W7 was supplied in more than 60 countries.

In 2017 Warpaint completed the acquisition of Retra Holdings Limited, a UK colour cosmetics business with a significant focus on the gifting market, principally for high street retailers and supermarkets including Boots, Superdrug and Asda. Retra owns three major brands: Technic, Body Collection and Man’stuff, in addition to supplying white label cosmetics produced for several major high street retailers including Asda and Matalan.

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