Beauty specialist Warpaint London’s first-half figures on Wednesday showed the supplier of colour cosmetics and owner of the W7, Technic, Skin & Tan, Super Facialist, Dirty Works and Fish Soho brands continuing to prosper on the revenue front — on the surface at least.

But the company’s shares fell more than 20% at one point as it cut its guidance due to business headwinds and as investors digested the numbers that showed the sales rise was down to its acquired Brand Architekts business and without that, the picture was less rosy.

Its revenue rose 8% in the six months to the end of June, reaching £49.3 million. But it had earlier forecast sales of £50 million-£52 million.
Its gross profit margin increased from 42.5% to 45%, but adjusted EBITDA was down 5% at £10.8 million and profit before tax fell a massive 41% to £6.4 million.

The latter figure predominantly reflected £4.6 million of non-cash losses on foreign exchange forward contracts, of which £2.7 million were unrealised at 30 June, “a £3.9 million gain as a result of the ‘bargain purchase’ (negative goodwill) of Brand Architekts and £1.3 million of exceptional costs associated with the acquisition” that it made in February.

The gross profit rise was due to “successful launches of new product lines, sourcing and volume savings”.

The Brand Architekts buy contributed to UK revenue rising 15.9% to £18 million while international revenue increased 3.2% to £31.3 million.

Brand Architekts sales were £6.1 million and represented 12% of overall group revenue in the period, while the company said it’s “already benefitting from the expansion of [the acquisition’s] brands into a number of group customers”.

Highlights of the half included the implementation of an inflationary price increase to all customers, which will have a greater impact in H2.

And it said Rest of World sales were up by 144% to £3.6 million, including the launch of an expanded range “with a significant Australian customer”.

Direct online sales, including £1.3 million from Brand Architekts brands, were up 48% to £3.4 million representing 6.8% of group sales.

Looking ahead, significant store rollouts for H2 have been agreed. In the UK, Superdrug started rolling out W7 into 140 new stores in June and this is ongoing. Tesco is undertaking a 150-store expansion of the group’s W7 impulse offering, and a gifting offering is going into 350 Boots stores at Christmas for the first time alongside an expansion of accessories into 250 additional stores.

In Europe, Tigota in Italy is launching a range of products in 200 stores with a capsule collection going into an additional 400 stores. Etos in the Netherlands is expected to expand its product assortment in all 546 stores with a permanent fixture and an enhanced range in selected stores.

And in the US, it’s expanding the W7 range to a further 399 stores with CVS, which started in August.

The company added that group sales for the eight months to 31 August, including £7.7 million from the Brand Architekts brands, were £67 million, up from £63.5 million, a year ago.

There are clearly challenges for the business as without the acquired brands, sales would have been lower than a year ago. 

One challenge is the administration filing of the UK-based Bodycare chain, which was a long-term customer of the group’s Technic products. Amounts due from the customer at the end of the first half totalled £0.5 million and “have been provided for in full”. But there’s a further £0.3 million due from trading after the period end. And future revenue from the customer is now, understandably, “uncertain”.

As a result of the above, along with an increasingly weak UK consumer environment and an uncertain US market given the recent tariff disruption, for the 2025 full year, the board now expects the company to achieve revenues of between £107 million and £112 million, and adjusted EBITDA of between £23.5 million and £25.5 million.