MIDAS SHARE TIPS UPDATE: Warpaint specializes in all things cosmetic, at a price that even cost-conscious consumers can afford
Young fan: TikTok star Vickaboo promotes the brand
As usual, the weather is good. As usual, we’re making the most of it. Brits love to party and this weekend gave us the perfect excuse. For most women (and some men), the holidays are synonymous with makeup, whether it’s a little lipstick or the whole job – foundation, blush, blush. eyelids and the rest.
war paint specializes in all things cosmetics, at a price that even cost-conscious consumers can afford – and the business is running full steam ahead.
Founded in the 1990s by two young entrepreneurs, Sam Bazini and Eoin Macleod, the company has its roots in the discount market, originally selling excess inventory of brands such as L’Oréal, Revlon and Max Factor to retailers at discount prices including B&M, TK Maxx and Savers. In 2002 they started selling their own line, W7, designed to be fun, affordable but also good quality.
Today, Warpaint is listed on the stock exchange and last year generated a 24% increase in sales to £64m, while profits soared 45% to £10m and the dividend rose. rose 18% to 7.1 pence.
Bazini and Macleod still run the business and W7 still accounts for the bulk of Warpaint sales. But several house brands are now on offer, including Technic, Very Vegan and Man’Stuff, all appealing to young people who want to look good without paying too much to do so.
Midas recommended the stock in 2017, when the group sold most of its merchandise to discount stores and independent retailers. Since then, however, there have been determined efforts to gain a foothold in major consumer chains, including Tesco, which started selling W7 cosmetics in 2020 and now has its range in 1,400 stores across the UK. . Boots also joined the list, Asda arrived last month and other well-known names are expected to enter service this year.
Bazini and Macleod also made great strides overseas. European sales increased by 56% last year and now represent more than 40% of the group’s turnover. Sales in the US jumped 80% last year to £5.3m, with further expansion planned this year and beyond.
Internet sales are also booming, both via Amazon and the group’s own websites. For the future, the prospects are bright. Brokers expect double-digit growth for the foreseeable future, predicting sales of £74m and profits of £12m this year, along with further big gains in 2024 and 2025.
The dividend is also at the center of attention. Bazini and Macleod each own 25% of the company. They are therefore not only motivated to succeed, but they also recognize the importance of rewarding shareholders. A payout of 7.7p is expected this year, rising to 8.7p next year and over 10p in 2025.
Midas verdict: Most women want to look good, but when times are tough they prefer to pay a little less. Warpaint products cost much less than premium brands, the products are well made, and customers tend to stay loyal to the company. There’s even a “coronation flash sale” this weekend. The shares are up 10% to £2.46 since 2017, but the best is yet to come – and the dividend is also attractive. Existing shareholders must remain loyal to the company. New investors might also benefit from buying a few stocks.
Traded on: AIM Teleprinter: W7L Contact: warpaintlondonplc.com or 01753 639130
