Shares in Warpaint London (W7L:AIM) tumbled to a 52-week low after the cosmetics seller warned challenging trading has persisted in FY26. As a result, current year sales are expected to be more second-half weighted, creating uncertainty for investors.
For the uninitiated, Warpaint sells low-priced colour cosmetics and personal care products. Its brands include W7, Technic, Dirty Works and Fish Soho.
Customers include Tesco (TSCO), Boots and Superdrug as well as US retail titan Walmart (WMT). Warpaint’s attractions also include its growing direct online business.
Unattractive outlook
The makeup supplier warned revenue for the four months to April 2026 is expected to be down around 20% year-on-year at £26.1 million. And FY26 sales are expected to be more second-half weighted than in prior years. This is due to ‘the timing of certain larger orders and planned customer rollouts from May 2026’.
However, management did stress that sales in April are ahead year-on-year with ‘signs of recovery being experienced’. And Warpaint continues to expand outside of the UK, Europe and the US. The company is making first forays into South America and India.
Resilience and progress
FY25 results were in line with February’s profit warning and reflected difficult trading conditions across many markets. Excluding the acquired Brand Architekts business, revenue declined 8.2% to £93.3 million. Pre-tax profits fell from £23.8 million to £18.1 million after a slew of rising costs.
‘Whilst the 2025 results were disappointing, it was a year of resilience and strategic progress for Warpaint,’ insisted chairman Clive Garston.
‘Despite a challenging macroeconomic backdrop and specific one-off headwinds, the group delivered record revenues, strengthened margins and maintained a robust, debt-free balance sheet.’
Garston added: ‘We also demonstrated the ability to execute value-accretive acquisitions, successfully integrating Brand Architekts and, post year end, adding the Barry M brand to further enhance the group’s brand portfolio and retail reach.’
Cavendish is sticking with its ‘buy’ rating on Warpaint for now, but it will review its forecasts. ‘Although there does appear to be good momentum in the customer orders, we believe the FY26 year-to-date trading performance will be of concern to investors,’ conceded the broker.
Shore Capital believes Warpaint should remain on investors’ watch list. It believes ‘strong strategic progress should once again come to the fore as consumer economies settle and normalise, and hence demand stabilises over the medium term’. But the broker warns ‘a bumpy ride might be expected ahead of then’.
Warpaint is often cited as a beneficiary of the ‘lipstick effect’. This is the phenomenon where consumers continue to buy affordable luxuries like cosmetics during economic downturns.
Yet a series of earnings misses suggest Warpaint isn’t as resilient as investors previously thought. Given weaker consumer demand, a more cautious retail customer base and geopolitical headwinds, we’re not convinced the downgrade cycle has run its course. Avoid for now.
Read the press release here: https://www.warpaintlondonplc.com/investors/rns-news
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