Warpaint London plc (LON:W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands, has announced its unaudited interim results for the six months ended 30 June 2021.
Financial Highlights
· Strong growth in sales, profitability and cash generation during the period reflecting the focus on growing sales of the Group’s branded products
· Group sales increased by 36% to £18.4 million in H1 2021 (H1 2020: £13.5 million, H1 2019: £18.9 million)
· UK revenue increased by 31% to £8.9 million (H1 2020: £6.8 million, 2019: £7.8 million)
· International revenue increased by 41% to £9.5 million (H1 2020: £6.7 million, 2019: £11.1 million)
· Gross profit margin of 34.5% (H1 2020: 35.1%, H1 2019: 34.9%), against the backdrop of supply side price inflation and significant increases in freight costs
· Adjusted EBITDA of £2.1* million (30 June 2020: £0.4* million, 30 June 2019: £2.1* million)
· Adjusted profit from operations of £1.6** million (H1 2020: £0.4** million, H1 2019: £1.3** million). Statutory profit from operations of £0.3 million (H1 2020 loss of £1.4 million, H1 2019 loss of £0.1 million)
· Cash generated from operating activities of £2.8 million (H1 2020: £2.3 million, H1 2019: 1.3 million)
· Cash of £6.7 million at 30 June 2021 (30 June 2020: £3.8 million, 30 June 2019 £3.7 million)
· The Company is now debt free with the remaining loans and HP contracts totaling £0.3 million having been repaid in full in April 2021
· The board has declared an increased interim dividend of 2.5p per share (2020 interim dividend 1.5p per share***)
· The Group’s financial performance is expected to continue to be second half weighted
Comparatives have been included for both the prior year period and H1 2019, a period not impacted by the Covid-19 pandemic.
* Adjusted for foreign exchange movements, share based payments and exceptional items.
** Adjusted for exceptional costs of which there were £5,000 in the period (H1 2020: £0.2 million, H1 2019 nil), £1.2 million of amortisation of intangible assets (H1 2020: £1.2 million, H1 2019 £1.2 million), and share based payments of £0.1 million (H1 2020: £0.3 million. H1 2019 £0.1 million). Adjusted numbers are close to the underlying cash flow performance of the business which is regularly monitored and measured by management.
*** The 2020 interim dividend declared comprised an interim dividend of 1.5p per share plus a one off additional 1.3p per share to reflect that no final dividend was declared for 2019
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 1,300 Tesco stores in the UK, up from 56 in June 2020
· Further product expansion in the US with W7 products now being stocked in over 1,000 Five Below stores
· As at 30 June 2021 the Group had a significant Christmas order book for the Group’s brands of £8.7 million (30 June 2020: £7.7 million), with further Christmas orders taken post period end and additional white label Christmas orders
· Online sales continue to accelerate in the UK and the US, with an increase of 115% in e-commerce sales in H1 2021 compared to H1 2020
· The Group’s expansion strategy continues with active discussions being held with additional major retailers in the UK and overseas
Post-Period End Highlights
· Agreement with Boots to stock a range of approximately 80 W7 products in an initial 84 stores from February 2022
· 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
· For the eight months to 31 August 2021 the Company had unaudited sales of £27.0 million (8 months to 31 August 2020: £22.8 million, 8 months to 31 August 2019: £27.7 million)
Commenting, Sam Bazini Chief Executive, said: “Following a difficult 2020 for everyone, it is pleasing to report a significantly improved performance from Warpaint in the first half of 2021. Prior to the impact of Covid-19 the business was trading well. Despite the continued effect of the pandemic, with lockdowns in many parts of the world, including the UK, for much of the first half, we have seen a return to the level of Group sales achieved in the first half of 2019, a period before the pandemic hit.
“We have seen particularly strong growth in the UK, with sales increasing beyond the level achieved in the first half of 2019, aided by the growing sales of our W7 brand through Tesco and of our Technic and Body Collection brands through wilko. In June 2020 W7 was being sold in 56 Tesco stores, today it is in over 1,300, with a further expansion of the W7 range in Tesco planned for later this year. In addition, W7 products will be launched in Boots early in 2022. There has also been a much improved performance in the US, strong growth elsewhere internationally and a rapid increase in online sales.
“Warpaint is a global business with the capacity, expertise and strategy, coupled with balance sheet strength, to drive future growth. We are working in partnership with our existing retailers to grow sales further and are in active discussions with additional major retailers in the UK and overseas. We have significant opportunities for further growth and I look forward to the remainder of the year and into 2022 with confidence.”
Investor Webinar
Warpaint’s management will be hosting an online presentation and Q&A session at 5.30 p.m. BST today, Wednesday 22 September 2021. This session is open to all existing and prospective shareholders. Those who wish to attend should register via the link below and they will be provided with access details:
https://us02web.zoom.us/webinar/register/WN_lh7Ytv7ASkuDJClO9rrqSQ
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.
