A weaker first half

Warpaint London's interim results, published on 23 September 2026, showed Revenue for the six months to 30 June falling 17.8% to £40.5m from £49.3m. The central question for the rest of the year is how much of the shortfall management expects to recover in the seasonally important second half.

Warpaint (LSE:W7L) sells affordable colour cosmetics, mainly under the W7 and Technic brands, through high-street, supermarket and discount retailers in the UK, continental Europe and the United States. Earlier this year it bought the Barry M Brand out of administration.

About the company

Warpaint London sells colour cosmetics under the W7 and Technic brands, and acquired Barry M out of administration earlier this year. Its customers include high-street, supermarket and discount retailers in the UK, Europe and the United States. Because it sells to retailers, its revenue depends on the timing of their orders and their range reviews.

What the interim numbers showed

The revenue decline reflected challenging trading conditions and the timing of orders. Barry M contributed £2.5m of sales in the period. Gross Margin improved to 47.3% from 45.0%, which the company linked to sourcing strategies and inventory benefits from the Barry M purchase.

Profit fell considerably more sharply than revenue. Adjusted Earnings before interest, tax, Depreciation and Amortisation dropped to £6.8m from £10.7m, pre-tax profit declined to £4.9m from £7.3m and adjusted Earnings Per Share almost halved to 4.5p from 8.3p. Cash rose to £20.7m, and the Interim Dividend was increased to 4.25p.

Why the second half carries more weight

The tilt towards the second half was flagged well in advance. In a trading update on 16 June, the chair, Clive Garston, said conditions continued to be difficult but that sales from 1 April to 31 May were ahead of the prior year at improved margins. The company said full-year expectations were unchanged and that sales would be more second-half weighted than in previous years because of the timing of larger orders and planned customer rollouts.

Several specific drivers were named at that point. Rossmann, the German drugstore chain, launched a W7 capsule range in about 2,200 stores in May, with early sales described as encouraging. In the United States, Warpaint pointed to an improved Christmas order from Walmart and a planned online Christmas gift range with Ulta Beauty. The Christmas gifting season has historically been significant for the group.

Risks and limitations

A heavier second-half weighting reduces visibility: if Christmas orders are delayed, cut back or sell through slowly, there is less time to compensate before the year end. Retailer destocking, intense competition in value cosmetics and pressure on consumer spending all remain relevant. LSE:W7L's sales are concentrated among a limited number of large customers, so decisions by individual retailers matter. Currency movements affect both US sales and sourcing costs, much of which is in Asia.

There is also a question over how durable the margin gain will be. Part of the first-half improvement came from inventory acquired with Barry M, a benefit that may not recur once that stock has been sold. The steeper fall in profit than in revenue also shows that costs have not adjusted to lower sales; in 2025 administrative expenses rose to £29.8m from £17.9m.

The interim figures

Revenue of £40.5m against £49.3m is a fall of £8.8m. Barry M contributed £2.5m, so excluding it, revenue fell by about £11.3m, or about 23%. Adjusted EBITDA of £6.8m on revenue of £40.5m is a margin of about 16.8%, compared with about 21.7% a year earlier on £10.7m of £49.3m. Pre-tax profit fell 33% from £7.3m to £4.9m. Adjusted earnings per share fell about 46%. Gross margin rose 2.3 percentage points to 47.3%, which would not offset the loss in volume.

The second-half weighting

The company said sales would be more second-half weighted because of the timing of larger orders and planned customer rollouts. If second-half revenue matched the prior year's second half, the full-year total would be lower than a year earlier by the first-half shortfall, so the recovery would need to exceed last year's level. The company has not given figures for the second half.

The named drivers

Rossmann launched a W7 capsule range in about 2,200 stores in May with encouraging early sales. In the US, an improved Christmas order from Walmart and a planned online Christmas gift range with Ulta Beauty are expected to help. These are individual customers, so the result depends on retailer behaviour. Christmas gifting has historically been significant for the group.

Cash and dividend

Cash of £20.7m and an interim dividend of 4.25p, increased despite lower profit, show the board's confidence in the second half and the cash position. Because adjusted earnings per share of 4.5p was only slightly above the dividend of 4.25p, the interim dividend was nearly equal to the half's earnings.

Retailer concentration and orders

Warpaint sells to a relatively small number of large retailers, so the timing of their orders has a visible effect on its reported revenue. A retailer's range review or a new product launch can bring a large order in one period and none in the next. The company said the first-half fall reflected the timing of orders as well as challenging trading conditions.

The Acquisition of Barry M out of administration added £2.5m of sales and a new brand, with the company linking part of the margin improvement to inventory benefits from the purchase. Buying a brand out of administration can bring Assets at a lower price, though the brand's earlier difficulties show that it needs careful management.

The cosmetics market is competitive, with new brands launching frequently, so retailers' choices of which brands to stock are an important factor. The Rossmann range of about 2,200 stores is a large rollout, and the early sales were described as encouraging.

The board's decision to raise the interim dividend despite lower profit shows a willingness to maintain payments while the Business waits for the second half.

What to watch

Investors should look for a post-Christmas trading update, which Warpaint has typically issued early in the new year, followed by full-year results for the year to 31 December 2026. Key indicators will be whether second-half revenue grew enough to offset the first-half decline, whether the improved gross margin held, and how much Barry M contributed in its first full trading season under LSE:W7L's ownership. Because the June update reaffirmed full-year expectations before the size of the first-half decline was published, investors will also want explicit confirmation of whether those expectations still stand.