Warpaint London PLC

Warpaint sells branded cosmetics under the lead brand names of W7 and Technic. W7, which represents 55% of revenue, is a design-focused cosmetic brand with a focus on the 16-34 age range, delivering high-quality cosmetics at affordable prices.

W7 is sold in the UK primarily to major retailers such as Tesco and Boots, and internationally to local distributors or retail chains such as Normal (DK) and Five Below (US). W7 is also available online via its own website, Amazon (US),Tmall and Xiaohongshu (China).

The Technic brand, which represents 36% of revenue, is sold in the UK and continental Europe with a significant focus on the gifting market, principally for high street retailers such as Wilko, and supermarkets. In addition, Warpaint supplies own brand white label cosmetics produced for several major high street retailers, which represents around 4% of Group revenue. The Group also sells cosmetics using its other brand names of Man'stuff, Body Collection, and Chit Chat, each targeting a different demographic.

The Group is geographically diverse, with its home market representing 43% of revenue, continental Europe 44%, the US 8% and its products were sold in a further 43 markets, representing 5% of revenue (FY 2022).

Strategy

The Group’s strategy consists of six key pillars:

• Develop and build the Group’s brands, providing new product development that meets changing trends and consumer needs
• Develop and nurture the current core business
• Grow market share in the UK
• Grow market share in the US and China
• Develop a digital strategy for brand development and profitable sales
• Reduce the Group’s environmental impact

Financial strategy

Warpaint operates in a growing sector and has been profitable since its inception in 2002 and remains focused on gross margin, cash generation and maintaining a strong, debt free balance sheet.

The Company outsources manufacturing to ensure competitive pricing, rapid production and an asset light structure.

The Group has not undertaken mass market TV or radio advertising. Instead, marketing initiatives are considered on a case-by-case, ROI, basis. The activities include:

• Trade shows
• In store display furniture
• Print media/editorials
• Social media
• Genuine make-up influencers and brand ambassadors

The Company’s operating expenses are relatively fixed, leverage with scale and evenly spread across the year. Costs are tightly controlled.

Warehouses and offices are leased, meaning that capex remains low and mostly represents in-store display furniture provided free of charge for B2B customers if they purchase sufficient inventory, which are depreciated over three years.

Distribution policy

While the Company does not have a defined dividend policy, cash generated by the business is principally used to make dividend payments in the year.