Welcome feedback on this company originally founded by two rivals in the cosmetics industry.
Warpaint has grown business over the last 5 years and has promoted sales via social media to some effect with the brands such as W7 and Technic under its division called “Own Brands”. These brands are sold in the UK and Europe via retailers and wholesalers with and emphasis on the gifting market.
They have expanded their brands with these – Man’stuff, Body Collection, Vintage, Very Vegan, and Chit Chat.
Very Vegan has been a particular hit of late with the emphasis on healthily living and Vegan products everywhere.
The brands are sold through Superdrug, Asda and Boots but more recently they signed deals for all Wilko stores and the latest was a very successful pilot trial with Tesco - here is the release:
“Warpaint also said Tesco had agreed to sell its products in more branches after an initial period. The supermarket chain has sold 15 W7 products in 209 Tesco Express stores since November and starting in February they will be available in another 678 branches.”
The Tesco Announcement was made in February so apart from the successful trial, it will take some time for the positive impact of sales to come from all 469 branches.
Looking at the numbers and taking into account the 2017 acquisition of Retra with emphasis on the gifting market, revenue has grown from £17M in 2015 to £49M in 2019 before the 2020 Covid hit.
More recently they announced a recovery:
“Warpaint said the upgrade was the result of “a result of stronger than previously anticipated trading in the second half”. Its shares jumped 13% to 95p at 08:06 GMT.”
Capex over the last 5 years has been fairly light with just £2-300K a year spend against annual profits of over typically £4M+ except for a drop off in 2019. Dividends have been reinstated as business activity recovered and the 2019 dividend was reintroduced with the 2020 declaration.
The US business was hit pretty hard with sales falling to $1.1M (1H2020) from $2.8M (1H 2019) but this is now on a recovery path with more emphasis on the branding.
Whilst this is not an extensive analysis, the balance sheet seems relatively secure, the business is recovering and it’s not inconceivable that this stock could double again in the next year or so, but that is not a forecast or in anyway an unwise prediction.
Games - Declared interest - I hold just over 20K shares in the company that is marginally underwater at present.