Beauty manufacturer and brand owner, Warpaint London, has reported a decline in sales and profits for the first half of 2020 due to the impact of the Covid-19 pandemic. The company experienced a significant drop in sales, with a 29% decrease to £13.5 million. International revenue was hit the hardest, plummeting by 40% to £6.7 million. However, the UK revenue only fell by 12% to £6.8 million. Despite the decrease in sales, the company managed to increase its gross profit margin to 35.1% from 34.9% and achieved an adjusted operating profit of £0.4 million, compared to £1.3 million in the previous year.

In a positive development, Warpaint London’s W7 brand has expanded its presence in Tesco stores in the UK. Initially available in 56 Tesco Extra stores, the core range of over 100 W7 products has now increased to 190 products. Additionally, an impulse range has been introduced in 41 Tesco Express stores. This has resulted in a total of 97 Tesco stores selling Warpaint London’s products, surpassing the company’s sales expectations.

Furthermore, Warpaint London has succeeded in stocking its exclusive Body Collection and Technic products in Wilko stores. The company also has plans to introduce a range of Technic and Body Collection gift sets for the Christmas shopping period. Despite the challenges posed by Covid-19, Warpaint London’s Retra brand has a significant Christmas order book, which is expected to support its performance in the second half of the year. Although the order book decreased from £10.1 million to £8.4 million compared to the previous year, it remains strong.

In order to mitigate the impact of the pandemic, Warpaint London has implemented cost-reduction measures and worked on improving margins at its LMS unit in the US. The company is actively engaged in discussions with major retailers in the UK and overseas to further expand its presence. Additionally, it has accelerated its online strategy in both the UK and the US.

As a result of its recovery after the Covid-19 lockdown, sales for the second half of the year are steadily approaching the company’s monthly budget levels established for 2020. From January to August, Warpaint London recorded unaudited sales of £22.8 million and an adjusted operating profit of £0.7 million. The company’s current expectation is that sales for the year will reach around £37 million, generating an adjusted operating profit of “in excess of £2 million.” This outlook assumes that there will be no further decline in trading conditions due to additional Covid-19-related lockdown measures or adverse exchange rate movements.

Useful links:
1. Warpaint London Official Website
2. Tesco Official Website