Warpaint weathers a tough trading year well, outlook improves
Colour cosmetics supplier Warpaint London saw its revenues fall and losses rise in the year to 31 December 2020 as the pandemic's impact saw its core customers suffering temporary store closers during the reporting period.
But the group, which owns the W7 and Technic brands, said it "weathered the pandemic storm well", seeing revenue in the 12 months fall to £40.3 million from £49.3 million in the year-ago period. It also reported a pre-tax loss of £1.1 million compared to a pre-tax profit of £1.8 million in the preceding 12 months. Adjusted profit from operating activities also fell to £2.5 million from £5.6 million last time.
But the group also continued to generate “significant” cash, increasing over 81% to £4.9 million while cash generated from operating activities increased 70.7% to £7.5 million.
And Warpaint also said it saw a trading improve in the first quarter of 2021, with sales for the first three months of 2021 9% ahead of the same period in 2020, “a period that was only impacted by Covid-19-related lockdowns in its last few weeks, with sales increases seen in all the group's geographic regions”, it noted. It also said product gross margin improved in Q1 on a year ago.
In the trading period, Warpaint said it was able to reposition its business to focus on mainstream high street stores and online while its W7 brand began sales within Tesco supermarkets and is now expanding its offer there. It also said its Technic and Body Collection products were made available in Wilko stores.
There is also news of further product expansion in US with W7 products now being stocked in over 1,000 Five Below stores.
Online, its products were launched on Amazon, helping e-sales “significantly accelerate” in the UK and US.
Chairman Clive Garston said: "Warpaint entered the pandemic in robust health, with a strong balance sheet and an agile management team capable of dealing with the challenges. I believe the group has weathered the pandemic storm well and has proved its flexibility and resilience in dealing with an unprecedented and unforeseeable situation.
"I am particularly pleased to note the progress we have made with the expansion of the number and type of UK retailers stocking the group's products and the growth of our online presence during 2020, together with the more recent roll out with Five Below in the USA."
He added: “Trading improved in the second half of 2020 and we are pleased to report this trend has continued into the first quarter of 2021. I am optimistic that these encouraging trends will continue and that we have the right strategy in place to deliver profitable future growth”.
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