Warpaint booms as Millennials buy more make-up and international ops soar

By

Sandra Halliday

Published
May 10, 2017

Make-up specialist Warpaint London, which owns the Gen Z and Millennial-focused W7 brand, said Wednesday that it enjoyed a strong 12 months in 2016. Its e-tail ops got off to a good start, brand awareness was at a high, sales and profits surged and its global business grew fast.

The company, which specialises in trend-based products and speed-to-market, listed on London’s Alternative Investment Market only last November. This was its first results report as a listed company and it was a good one. It said proforma results, adjusted for a number of one-off factors, saw revenue up by 21.1% to £27m and the operating margin was up by over 25%. Earnings per share rose by 24.6% to 8.6p and proforma pre-tax profit was £5m.

So how did it achieve such results? International growth and prioritising digital. Chairman Clive Garston described W7 as a “now-global brand”, a label that seems to be justified give that it is currently available in Europe, Australia and the US, as well as its native UK.

Joint CEO’s Sammy Bazini and Eoin Macleod said 2016 was a transformational year for the business, seeing “strong progress” both in its domestic and international markets and the US grew from around 3% of W7 revenues to over 12%.
That’s important given that the W7 label accounts for over 80% of its business (it also has smaller brands and a close-out division). And while most of that W7 business is through high street stores and independents, the launch of its e-tail site last year was clearly a major step forward and is a “growing contributor” to its overall revenues. 

Warpaint also said that its close-out business, which sells branded products mainly in the UK, “provides a useful source of knowledge of the colour cosmetics market and access to new market trends.”

NEW CONSUMERS, NEW DEVELOPMENTS

The company said W7 benefitted last year from “a more engaged and educated customer base, driven by the success of beauty blogs, celebrity endorsement and social media.” It added that it has had a number of “well received recent campaigns with high profile television celebrities that have translated into increased online ordering and brand awareness.”

Clearly, the brand is a well-run operation. But it has also benefitted from being in the right place at the right time. The global mass market for colour cosmetics is expected to be the fastest growing cosmetics market category and in mature markets such as Western Europe and the US, the firm said consumers are increasingly favouring low cost make-up.

The US is the largest colour cosmetics market globally, with a retail value in 2015 of around $11bn, nearly three times the second largest market of China, at approximately $4bn. And consumers in both markets seem to be hungry for new, on-trend brands and product innovation.

That’s also the case in the UK, which was the fourth largest retail colour cosmetics market in the world in 2015 and is forecast to grow from an estimated £1.8bn this year, to around £2.4bn in 2021.

Warpaint said that with the cosmetics industry undergoing change, as today’s consumers are increasingly connected and influenced by friends, beauty bloggers, social media and other online content, beauty firms need to react to this.
Overall, it is prioritising global growth, social media marketing and e-sales. It particularly wants to grow in those key Chinese and US markets and is driving this aim with a focus on social media and e-commerce activities. it plans to launch new US and China focused e-tail sites soon, with the ability to transact in local currencies.

And to resonate with modern consumers’ lifestyles, the company is also planning the launch this June of a new range called Very Vegan. These products have been developed specifically for vegans and others supporting an animal-friendly lifestyle and the company sees major growth potential here.

It recently also developed the Outdoor Girl range, saying sales have been encouraging. And it is working on more new brands, including a premium line called CopyCat to target large health and beauty retailers, a prestige brand called Smooch for department stores, and Taxi, a line to satisfy bespoke ad-hoc orders from the value sector.