- 2024 profits up 30%
- New year off to ‘positive’ start
- Growth slowdown, upgrades absence weigh
As per usual, there was plenty to like about the latest trading update from affordable cosmetics supplier Warpaint London (W7L:AIM). The company, which supplies its wares to Tesco (TSCO), Boots and Walmart (WMT:NYSE), reported a ‘strong’ performance for the year to December 2024 and hailed a ‘positive start’ to 2025.
Unfortunately, the update revealed a slowdown in sales and profit growth for 2024 amid swirling consumer spending headwinds.
And the Buckinghamshire-based firm failed to deliver the earnings upgrade to which investors have become accustomed in recent years, sending the shares down more than 20% to 422.5p.
SLOWING GROWTH
Value-oriented player Warpaint, which owns the W7 and Technic makeup brands, guided for year-to-December 2024 revenue of roughly £102 million, implying near-15% year-on-year growth.
That should translate into a 30%-plus rise in pre-tax profits to approximately £24 million.
However, this represents a slowdown versus the 40% revenue growth and 136% surge in taxable profits Warpaint delivered in a record 2023.
Warpaint insisted its strong performance has continued into January 2025, with revenue up 15% on January 2024 and at an improved margin to boot. CEO Sam Bazini said he was ‘pleased’ with the group’s strong start to 2025 ‘despite ongoing consumer spending headwinds’, and predicted continued growth across the group in 2025.
BRAND ARCHITEKTS BOOST?
This year and beyond Warpaint, which sells its wares online via its own website and through Amazon (AMZN:NASDAQ) and Chinese platform Tmall, should begin to see the fruits of recent £13.9 million acquisition Brand Architekts, the rival beauty specialist behind Skinny Tan and Super Facialist which is being integrated into the group.
When it announced the deal in December, Warpaint explained: ‘Having followed Brand Architekts for some time, as another company admitted to trading on AIM operating in a similar sector, the Warpaint board believes that the acquisition at this time is an exciting and relatively low risk opportunity to further bolster Warpaint’s growth opportunities.’
Warpaint also insisted the acquisition will ‘enhance Brand Architekts’ proposition and profitability as part of a larger, successful health, beauty and personal care business.’
