(Alliance News) - Warpaint London PLC on Wednesday reported a sharp drop in annual profit and has cancelled its final dividend but is confident for the future.
In 2019, the cosmetics firm's pretax profit contracted 63% to GBP1.8 million from GBP4.7 million in 2018. Warpaint's revenue, however, grew 1.6% year-on-year in 2019 to GBP49.3 million from GBP48.5 million.
Administrative expenses were 17% higher in 2019 at GBP14.4 million from GBP12.3 million in 2018.
Chair Clive Garston said: "The group had a satisfactory trading performance in 2019 and there was a positive start to the current trading year. Since the year end the W7 range has been successfully launched into Tesco, and early results are encouraging. Active discussions are taking place with other major retailers."
In the UK, Warpaint said its W7 brand saw sales slip 5%, as the nation's high street spending took a hit from Brexit concerns and a winter general election. In Europe, W7 sales grew 21% but dropped 11% in the US.
Warpaint's second brand, Technic, saw UK sales fall 3%, with the firm attributing the dip to the same reasons for the W7 fall. European sales rose 35%, while US sales were "material for the first time".
Garston, however, noted current trading has been hit by the coronavirus pandemic.
He said: "However, currently the Covid-19 pandemic is casting a giant shadow over world economies and Warpaint is not immune to it. As was stated in our update in April, trading for the first two months of the current year was at the upper end of the board's expectations, but since then there has been a substantial reduction in group sales as a result of lockdowns, which have caused the closure of many of our customer's retail outlets in the UK and in our other markets."
Due to the uncertainty caused by the Covid-19 outbreak, Warpaint has decided against paying out a final dividend. As a result, the company's total payout for 2019 is 1.5 pence, down from 4.4p in 2018.
Garston said the company has the financial strength to withstand a complete lockdown in all of its markets to the end of 2020.
He continued: "The directors believe that the company's business model remains robust and It is the board's opinion that without the impact of the corona virus pandemic, 2020 would have been a year of recovery and improvement in financial performance for the group. There are exciting opportunities for Warpaint and we continually review and refresh our product offerings and are well-placed to grow."
Shares in Warpaint London were down 4.8% in London on Wednesday afternoon at 40.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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Warpaint London (W7L)