Warpaint warns of weaker profits after major customer enters administration; shares plunge

Warpaint London Plc warned on Wednesday that it expects lower-than-previously-anticipated profits for the year after a major customer went into administration and trading conditions weakened, sending the company's shares sharply lower.

The cosmetics group said pre-tax earnings fell 41% year-on-year in the first half of 2025, attributing the decline largely to currency headwinds and costs related to its acquisition of Brand Architekts. It also flagged an "increasingly weak UK consumer environment and an uncertain US market given the recent tariff disruption," and identified Bodycare, a long-term customer for its Technic range, as having entered administration.

Warpaint said it now expects full-year revenues of between £107 million and £112 million, with "adjusted earnings before nasties" of £23.5 million to £25.5 million. By comparison, the group recorded revenues of £101.6 million and adjusted earnings before nasties of £24.2 million in 2024.

For the six months to June 30, UK revenues rose 15.9% to £18 million despite a 14% fall in sales of the W7 and Technic ranges, while international revenues edged up 3.2% to £31.3 million. The company said first-half sales marginally missed expectations and warned that revenues and earnings for the year would be weaker than its prior outlook.

Chief Executive Sam Bazini said the group had "traded satisfactorily during the first half despite the challenging macroeconomic environment," but added that subdued customer and consumer confidence appeared likely to persist. "Coupled with continuing US market uncertainty, alongside a specific customer recently going into administration, we are disappointed to be lowering our expectations for the full year," Bazini said. He added the company expected a stronger second half supported by price increases across customers, new store rollouts in the UK, EU and US, and seasonal gifting sales.

Warpaint's shares dropped sharply on the news, falling about 21.1% to 225 pence by midday. The decline left the group's market value down by more than half since the start of 2025 and at its lowest level since April 2023; the stock remains roughly 65% below a July 2024 peak of 632p.

Analysts at Shore Capital said the interim results reflected a combination of pressures across UK and European consumer markets and the uncertainty surrounding the US tariff regime. "Trading conditions have toughened further over the summer, with consumers cautious and some retail customers actively managing inventory levels," the firm wrote, and said it was lowering forecasts in line with Warpaint's reduced guidance.

Warpaint pointed to several operational responses aimed at supporting the second half, including price rises, expansion into new retail locations and the integration of Brand Architekts' brands to drive medium- and long-term growth, particularly in the UK and Europe. The group stressed that it anticipated these factors would underpin a better performance in the latter half of the year.

Investors and analysts will closely watch how US tariff developments and the broader consumer trend affect retail demand and inventory management among Warpaint's customers. The company's revised guidance and the collapse of a listed customer highlight the sensitivity of cosmetics suppliers to retail sector dynamics and trade-policy shocks.

Warpaint's interim disclosure follows a year of heightened volatility for the stock, as investors weigh near-term profit pressures against the company's distribution relationships with major UK retailers and its recent brand acquisitions.