Warpaint London strong growth in sales, profitability and cash generation

Warpaint London

Warpaint London plc (LON: W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands has announced its audited results for the year ended 31st December 2021.

Financial Highlights

·   Strong growth in sales, profitability and cash generation during the year reflecting the focus on growing sales of the Group’s branded products 
·   In 2021 Group sales increased by 24.1% to £50.0 million in 2021 (2020: £40.3 million)
  ·    UK revenue increased by 20% to £25.3 million (2020: £21.1 million)
 ·    International revenue increased by 29% to £24.7 million (2020: £19.1 million) 
·   Gross profit margin increased to 33.8% (2020: 31.1%), against the backdrop of supply side price inflation and significant increases in freight costs 
·   EBITDA of £7.6 million (2020: £2.8 million) 
·   Adjusted profit from operations of £7.0* million (2020: £2.5* million). Statutory profit from operations of £3.8 million (2020 loss of £0.9 million) 
·   Reported profit before tax of £3.7 million (2020 loss of £1.1 million) 
·   Adjusted earnings per share of 7.8p* (2020: 3.1p*) 
·   Cash of £4.1 million at year end 2021 (2020: £4.9 million) after investment in additional inventory.  Inventory at 31 December 2021 of £18.1 million (31 December 2020 £14.4 million) 
·   The Group was at 31 December 2021, and still is, debt free with the remaining loans and hire purchase contracts totaling £0.3 million having been repaid in full in April 2021 
·   Final dividend recommended of 3.5 pence per share (2020: 3.0 pence per share), bringing the total dividend for the year to 6.0 pence per share (2020: 5.8 pence per share, including a 1.3 pence special dividend)

*Adjusted numbers are closer to the underlying cash flow performance of the business which is regularly monitored and measured by management, the adjustments made to the statutory numbers are set out in the table below

Operational Highlights

·   Further expansion in the number of Tesco stores stocking the Group’s products and the stocking of additional W7 product lines. W7 branded products now sold in over 1,400 Tesco stores in the UK 
·   Further product expansion in the US, including W7 products now being stocked in over 1,200 Five Below stores. New sales team in place in the USA to drive growth in the largest colour cosmetics market in the world 
·   Online sales continue to accelerate, with an increase of 159% in Group e-commerce sales in 2021 to account for 2.7% of Group sales (2020: 1.3% of Group sales) 
·   Further expansion of online sales presence with the launch in China of official W7 brand stores owned by the Group on Taobao Mall (Tmall), the most visited B2C online retail platform in China and Xiaohongshu (Red), one of China’s foremost social media, fashion and luxury shopping platforms. We now have 15 online distributors in China 
·   The Group’s expansion strategy continues with active discussions being held with additional major retailers in the UK and internationally 

Post-Period End Highlights

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·   Successful launch in Boots of 45 W7 products in an initial 80 stores in February 2022 
·   Record trading experienced in the first quarter of 2022 – Group sales for the first three months of 2022 approximately 60% ahead of the same period in 2021, with sales increases seen across all the Group brands 
·   Gross margin continued to improve in the first quarter of 2022 versus both Q1 2021 and the full year 2021 
·   Six new accounts opened in the USA, including CVS, where a significant Christmas 2022 order has also been received 

Commenting, Clive Garston, Warpaint London Chairman, said: “I am pleased that despite much of the world having some level of lockdown during 2021 and the continued enforced temporary closure of a number of the Group’s customers’ retail outlets, sales and profits increased in 2021 to exceed the 2019 pre-pandemic level.

“In the first quarter of 2022 we have enjoyed further profitable growth as we focus on supplying additional retailers and growing sales through our existing customers, taking more warehouse space and adding further stores. In the UK the launch of our W7 products in Boots in February 2022 is a particular highlight and we anticipate adding further large store groups to our customer base in due course.

“The global cosmetics market is increasingly seeing customers transferring to more value orientated brands, such as those produced by the Group, and I believe we are very well placed with our high quality focused offering to capture further market share.

“I am optimistic that the very encouraging trends we have seen in 2021 and into 2022 will continue, and that we have the right offering and strategy in place to continue to deliver profitable future growth.”

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018

Investor Webinar

Warpaint’s management will be hosting an online presentation and Q&A session later today at 5.30 p.m. BST. This session is open to all existing and prospective shareholders.  Those who wish to attend should register via the following link and they will be provided with access details:


Participants will have the opportunity to submit questions during the session, but questions are welcomed in advance and may be submitted to: warpaint@investor-focus.co.uk.

Warpaint London sells branded cosmetics under the lead brand names of W7 and Technic. W7 is sold in the UK primarily to retailers and internationally to local distributors or retail chains. The Technic brand is sold in the UK and continental Europe with a significant focus on the gifting market, principally for high street retailers and supermarkets. In addition, Warpaint supplies own brand white label cosmetics produced for several major high street retailers. The Group also sells cosmetics using its other brand names of Man’stuff, Body Collection, Very Vegan, and Chit Chat.

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