Sam Bazini and Eoin Macleod, joint chief executives of cosmetics supplier Warpaint (W7L), have been selling beauty products since their teenage years on London’s markets. So they understand how lumpy trading can be in the company’s ‘close out’ division, where Warpaint sells excess cosmetics – say, a batch of 10,000 lipsticks from a major brand – to its high street, wholesale and mass-market clients. Such sales fell from £2.6m in last year’s first half to £2.2m, attributed to scheduling effects. But sales of own-brand W7 cosmetics were ahead across all regions, rescuing the top line.
So why did the market send the company’s shares down 14 per cent on results day? Investors were focused on the bad news after June’s annual meeting statement said European sales were flat: that’s disappointing for a company whose growth is partly reliant on overseas expansion, with its products now in 56 countries across the globe. In the first half, it was trading in the UK that took some explaining. A decline in footfall in the second quarter was linked to the usual suspects: the general election and terrorism fears. Still, domestic sales were 3 per cent up across the half, and Christmas orders are significantly ahead.
Stockdale Securities analysts forecast pre-tax profit of £7.6m for the year to December 2017, giving EPS of 9.4p (from £6.7m and 8.6p in 2016).
| WARPAINT (W7L) | ||||
| ORD PRICE: | 163p | MARKET VALUE: | £178m | |
| TOUCH: | 160-165p | 12-MONTH HIGH: | 310p | LOW: 108p |
| DIVIDEND YIELD*: | 1.8% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 26p | NET CASH: | £2.5m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 10.2 | 2.84 | 3.64 | nil |
| 2017 | 13.3 | 2.88 | 3.59 | 1.4 |
| % change | +30 | +1 | -1 | - |
| Ex-div: | 2 Nov | |||
| Payment: | 17 Nov | |||
| *Excludes pre-IPO dividends | ||||
