W7 Cosmetics’ new face: Love Island star Olivia Buckland
The company behind W7 Cosmetics, which recruited Love Island star Olivia Buckland as its new face for 2018, lost nearly half of its market value today after issuing a profit warning.
Warpaint London, which also owns Technic and Man’stuff brands, said retailers cut back on Christmas orders and this would hit profits, sending its shares crashing as much as 45 per cent.
The company said that international trading has remained strong, but it was not enough to offset a decline in its key UK market.
Accounting for nearly half of the group’s sales (44 per cent) in the first half of the year, the UK market has seen ‘further slowing recently, with retailers reducing stock levels and Christmas orders’, the company said.
‘This reduction in previously anticipated UK sales will have an impact on Group performance for the full year that will not be completely offset by better than anticipated performance in our major overseas sales territories,’ it added.
Shares in the small cap firm were down 45 per cent at 112.20p at around midday.
Warpaint London’s brands are stocked in high street retailers including B&M, TK Maxx, Boots and Superdrug. It also produces white label products for the likes of Asda and Matalan.
The company said it expects revenues for 2018 to come in between £48million and £52million and pre-tax profits to be in the range of £8.5million and £10million, down from a previous estimate of £12million.
The firm, which debuted on London’s junior market in late 2016, said it saw strong growth in international markets with sales in the US up 60 per cent as at the end of September, while EU sales excluding the UK were up 13 per cent.
Falling: Warpaint London shares crashed by 45% today
Karla Rendle, senior analyst at GlobalData Retail, said: ‘The cosmetics market in the UK continues to see strong growth forecast, however a highly saturated market means retailers are under greater pressure to respond to ever changing trends.
‘Placing smaller orders allows retailers to be more agile in reacting to trend-fuelled demand and prioritising shelf space.
‘Social media drives trends for make-up at such a pace that retailers will suffer if they order too much of the wrong brand or product.’