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Warpaint London’s record annual results, significant EU market expansion, and robust online sales growth indicate a promising outlook despite a high forward consensus earnings rating.

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Solid Performance across Markets

Warpaint London, a renowned cosmetics company, recently reported record annual results, reflecting a successful expansion with both new and established retail customers across various markets. The company recorded an impressive 27% increase in the full-year dividend, providing a substantial reward for investors.

In the EU, Warpaint London’s largest market, revenue soared by 61%, marking a significant expansion with its brands at the Normal, Etos, and Wibra chains. The UK market also saw growth, with an 18% increase in revenue following the addition of Superdrug to the client roster, which already includes Tesco and Boots.

Sales expanded by 37% in the US, a market where the company is still establishing its presence. Key developments in this market include product rollouts in an additional 387 CVS stores and a substantial Christmas order from Walmart.

A Resilient Business Model

Warpaint London’s business model proves to be robust, with over 90% of the company’s revenue being generated by the in-house W7 and Technic brands. A key contributor to this performance is the surge in online sales, which more than doubled to £6.2 million. Despite the challenging macro climate, the company managed to maintain its pricing since January 2022.

Another positive indicator is the growth in gross margin by a robust 350 basis points to 39.9%. This is supported by a resilient balance sheet, with zero debt, allowing the company to weather the higher interest rate environment without direct financial turbulence.

Investments in stock led to an inventory worth £28 million at the year-end, increasing by over £9 million from 2022, which further helped to circumvent supply chain issues.

Outlook and Analysis

The encouraging trading performance continues into the new financial year. There is a 28% revenue increase in the first quarter and margins surpassing the full-year postings.

However, the shares are rated at 22 times forward consensus earnings. This high rating indicates that the market is up to speed with events.

Despite this, Warpaint London’s record results, solid market performance, strong online sales growth, and resilient financial health paint an optimistic future. The company’s strategic positioning in key markets, including the promising US market, and its ability to navigate macroeconomic challenges, offer potential for sustained growth.

While the shares’ high rating might introduce some caution, the company’s performance suggests a potential long-term investment opportunity, provided the positive trends continue.