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Post from ADVFN:

nawaralsaadi11 Jun '26 - 17:19 - 4754 of 4759

10 0

I think the market is still missing the bigger picture with Warpaint.

The company is steadily evolving from a mostly single-brand platform, W7, into a broader multi-brand beauty platform. If Warpaint can maintain its operating discipline and margin profile, this has important implications for revenue durability, cash flow certainty and valuation.

One of the biggest risks in beauty is fashion risk. Brands move in and out of favour. Products trend, mature and get replaced. Consumer attention shifts quickly. That risk is much higher when a company depends too heavily on one brand. A broader portfolio reduces that risk because weakness in one brand, category or channel does not have to derail the whole group.

When Warpaint came public in 2016, W7 represented roughly 80% of group revenue. Today, that has fallen to about 61%, even though W7 revenue has grown roughly 2.5x since the early public-company years. With Barry M now in the mix, I expect W7’s share of group revenue to move into the mid-50s over the next year or two.

I think Barry M could become a more important asset than the market appreciates. It has long UK heritage, strong brand recognition, existing retailer relationships, and significant room to grow outside the UK. In Warpaint’s hands, Barry M does not need to become a blockbuster. It simply needs to be stabilized, refreshed and gradually expanded.

The benefits are not just about diversification. More brands also give Warpaint more leverage with retailers. Retailers want newness, category coverage, gifting ranges, seasonal products, exclusive launches, different price points and brands that appeal to different customers. A broader portfolio gives Warpaint more reasons to be in the room with Tesco, Superdrug, Boots, Rossmann, Etos, Tigotà, CVS, Walmart and others.

Many investors focus almost entirely on growth. But cash flow certainty can matter just as much. A business with more predictable revenues, more diversified brands, and less dependence on any one product cycle should deserve a higher multiple than a business where everything rests on a single brand staying fashionable.

That is the valuation point I think matters. If Warpaint becomes a broader house of brands while maintaining margins, the quality of its earnings improves. The market should be willing to pay more for £1 of earnings that comes from a diversified portfolio of brands and retailers than for £1 of earnings that depends almost entirely on W7.

In other words, the multiple can expand not just because the company grows faster, but because the cash flows become more dependable. A positive update on Barry M integration at the AGM next week should prove highly constructive in this context.

Post from ADVFN:

nawaralsaadi26 May '26 - 18:14 - 4731 of 4738

15 0

The market is yet to price the upside from new EU parcel charges on low value items, coming online in July and November this year:

1. €3 small-parcel customs duty

From July 1, 2026, the EU will apply a fixed €3 customs duty on parcels under €150 entering the EU. The important detail: it is not just €3 per parcel. The Council says the €3 duty will apply to each different item according to tariff heading inside a consignment. So a parcel containing one category of item (i.e. nail polish) may face €3, but a mixed basket across different tariff headings (nail polish + mascara) would face a a charge of €6.

2. Handling fee

A separate fee is also expected, reportedly around €2 per direct-to-consumer parcel, or €0.50 if handled through an EU warehouse/trusted route. This is meant to cover the cost of customs checks and enforcement.

The combination of the above would increase the price of a €2 nail polish ordered from the likes of Temu in the EU from €2 to €7! This is a major difference and will provide a strong tailwind for European retailers, and their suppliers such as Warpaint.

Interesting that W7L is now back testing the 200p area after recently touching ~165p, yet sentiment still remains extremely cautious.

To me, the debate now seems to be gradually shifting from:

“is the business broken?”

toward:

“did the market overreact to a weak FY26 start?”

Still massively below historic valuation levels despite:

➡️ debt free balance sheet

➡️ strong cash position

➡️ improving margins

➡️ attractive yield

➡️ and ongoing global expansion catalysts

Interesting that despite the weak broader UK retail numbers, the ONS specifically highlighted “strong and sustained sales for beauty product stores”.

That suggests the underlying beauty/cosmetics category itself remains relatively resilient, even in a difficult consumer environment.

For me, that points more toward W7L facing a confidence/execution reset rather than operating in a structurally broken end-market.

The key point for me is that the market is currently pricing W7L more like a structurally impaired ex-growth business than a temporarily weakened one.

Yet the company still has:

➡️ £16m cash

➡️ NO debt

➡️ improving gross margins

➡️ 13p dividend

➡️ expanding global distribution

➡️ Rossmann Germany rollout into 2,200 stores

➡️ Barry M acquisition

➡️ improving April sales YoY

➡️ management guiding for H2 improvement

To me, this looks far more like a cyclical earnings reset than a broken business.

If the recovery signs continue through H2, today’s valuation could eventually look extraordinarily pessimistic in hindsight.

Comparing a small AIM cosmetics company to the S&P 500 is meaningless.

W7L already scaled from a tiny AIM stock into a £100m+ global cosmetics business with:

➡️ NO DEBT

➡️ £16m cash

➡️ strong cash generation

➡️ expanding international distribution

And importantly:

➡️ today’s valuation is NOTHING like IPO valuation.

At ~170p:

➡️ valuation heavily compressed

➡️ yield now ~7–8%

➡️ margins improving

➡️ Barry M adds scale

➡️ Rossmann Germany rollout could become a major revenue driver

➡️ India + South America only just starting

The market is currently pricing this as if growth is permanently broken.

Management clearly disagrees — otherwise they would NOT have increased the dividend 20%.

Normal concentration risk is well known and already heavily discussed by the market — but the key point bears miss is that W7L is actively EXPANDING beyond that base, not shrinking into it.

➡️ Rossmann Germany rollout into 2,200 stores

➡️ CVS expansion in the US

➡️ Boots/Superdrug/Tesco expansion

➡️ India + South America launches

➡️ Barry M acquisition adding major UK footprint

➡️ Online sales +38%

That is not a company “standing still”.

Also:

➡️ £105m revenue

➡️ £16m cash

➡️ NO DEBT

➡️ 13p dividend

➡️ improving gross margins

hardly screams “poor management”.

The founders already built this from a tiny AIM business into a globally distributed cosmetics group sold across thousands of stores internationally.

Today’s issue is clearly weaker trading/sentiment — not inability to scale.

Interesting that Berenberg only modestly cuts W7L target to 470p (510p) and keeps BUY.

That’s hugely telling after today’s panic sell-off.

➡️ Still sees massive upside from current SP

➡️ No downgrade to Hold/Sell

➡️ No balance sheet concerns

➡️ Dividend UP 20%

➡️ Cash UP

➡️ NO DEBT

Looks far more like:

“temporary earnings reset”

than anything else here.

At these levels, risk/reward looks increasingly compelling.

Worth remembering that the market already received the key FY2025 headline figures back in February, yet the shares are now trading around ~200p versus ~500p within the past 12 months. That suggests a very large amount of caution and macro fear is already reflected in the price.

Tomorrow is not really about whether 2025 was a transition year — the market already knows growth slowed. The real question is whether management confirms what they already guided in February:

• return to organic growth in 2026

• further significant customer rollouts

• successful Barry M integration

• continued expansion across major retail channels

If those points are confirmed, then the current valuation starts to look extremely compressed for a debt-light, cash-generative cosmetics business still expanding distribution globally.

Also worth noting:

• disclosed shorts have collapsed to very low levels

• no profit warning has been issued

• beauty sector read-across recently (THG Beauty etc.) has actually been reasonably supportive

• dividend yield at current levels is attractive for a growth AIM stock

The current share price feels more consistent with severe structural problems, yet management commentary so far has pointed more toward a temporary slowdown / transition phase combined with macro pressure.

If tomorrow’s wording is even moderately constructive, I think the market could very quickly start reassessing whether ~200p properly reflects the medium-term earnings and growth potential here.

“Based on 2 Wall Street analysts offering 12 month price targets for Warpaint London in the last 3 months. The average price target is 475.00p with a high forecast of 510.00p and a low forecast of 440.00p. The average price target represents a 88.27% change from the last price of 252.30p.”

https://www.tipranks.com/stocks/gb:w7l/forecast

Tariffs are an industry-wide factor, not something unique to Warpaint — and importantly, Warpaint is structurally better positioned than most to navigate them. The company operates an asset-light, outsourced manufacturing model with very low production costs and strong gross margins, giving it significant pricing flexibility and resilience.

Warpaint has already demonstrated its ability to successfully manage through tariff uncertainty while remaining highly profitable and cash generative. With £18m net cash, expanding global distribution and disciplined cost control, it has the financial strength and operational flexibility to protect margins and continue growing.

Crucially, management has already guided to a return to organic growth in 2026, alongside further significant new customer rollouts expected at the April results. At the same time, the Barry M acquisition adds immediate scale, over 1,300 retail distribution points and meaningful earnings upside potential — secured at an exceptionally attractive price.

The market itself is confirming this strengthening outlook. The shares have re-rated sharply from the lows, short sellers have been consistently reducing exposure, and major institutional investors such as Schroders have increased their holdings. That is not what happens when fundamentals are deteriorating — it is what happens when confidence in future growth is improving.

With expectations still reset well below historic levels, net cash on the balance sheet, margins recovering and multiple growth catalysts ahead, the upside potential here remains significant. The re-rating process appears to be underway, and the market is only beginning to recognise the improved outlook, in my view. DYOR.

Just been reviewing and trying to understand the chart/trend here, and chart here now looks to be forming an inverse head & shoulders, which is usually a bullish reversal pattern.

Basically, it often signals the end of a downtrend and the start of a new upward move as sellers get absorbed and buyers take control.

With shorts reducing, institutions adding, and fundamentals improving (M&A is a cherry on top!), the technical setup here looks increasingly positive.

This could be the base before the next leg higher, fingers crossed.

Short reductions continue to show up clearly in the disclosure data. According to ShortTracker, JPM has once again reduced its declared short position in W7L, with the latest cut dated 13 February, marking a series of reductions since December.

Arrowstreet Capital has also reduced its position in February, while Spark Investment materially reduced its disclosed short earlier.

Taken together, this represents a clear trend of declining disclosed short exposure. When large institutional shorts progressively reduce positions rather than increase them, it suggests risk is being reassessed following the recent update and strategic Barry M acquisition.

With less mechanical selling pressure from short covering and the company guiding toward a return to organic growth alongside further significant customer rollouts expected to be announced in April, the technical and fundamental backdrop continues to strengthen.

Source:

https://shorttracker.co.uk/company/GB00BYMF3676/

More Short closures here, and this time it’s by Arrowstreet Capital:

https://shorttracker.co.uk/company/GB00BYMF3676/

“Based on 2 Wall Street analysts offering 12 month price targets for Warpaint London in the last 3 months. The average price target is 475.00p with a high forecast of 510.00p and a low forecast of 440.00p. The average price target represents a 123.53% change from the last price of 212.50p.”

https://www.tipranks.com/stocks/gb:w7l/forecast

Further short reductions continue to show up in the disclosure data. According to ShortTracker, JPM has now reduced its declared short position in W7L again, with the latest cut dated 9 February, following multiple reductions since December. Spark Investment also reduced its disclosed short earlier.

Short covering doesn’t have to appear as obvious aggressive buying on the daily tape — it can be done passively, internally crossed or worked over time. What matters is the regulatory disclosure trend, and that trend is clearly moving in one direction.

With declared short exposure falling, a key source of mechanical selling pressure is easing just as uncertainty around trading, balance sheet strength and the Barry M acquisition has been removed. That doesn’t guarantee an immediate upside move, but it materially improves the risk/reward backdrop from these levels.

https://shorttracker.co.uk/company/GB00BYMF3676/

Further short reductions continue to show up in the disclosure data. According to ShortTracker, JPM has now reduced its declared short position in W7L again, with the latest cut dated 9 February, following multiple reductions since December. Spark Investment also reduced its disclosed short earlier.

Short covering doesn’t have to appear as obvious aggressive buying on the daily tape — it can be done passively, internally crossed or worked over time. What matters is the regulatory disclosure trend, and that trend is clearly moving in one direction.

With declared short exposure falling, a key source of mechanical selling pressure is easing just as uncertainty around trading, balance sheet strength and the Barry M acquisition has been removed. That doesn’t guarantee an immediate upside move, but it materially improves the risk/reward backdrop from these levels.

Margins being down year-on-year is already well understood — and crucially, more than priced in. The shares de-rated ~45–50% before this update precisely because the market assumed margin compression, customer disruption and a tough consumer backdrop. That pessimism is already embedded in the price.

What this update actually confirms is that trading has held up materially better than feared. Gross margins improved, Brand Architekts was turned profitable within a year of acquisition, and management is explicitly guiding to a return to organic growth in FY26 as the known one-offs roll off. That’s a meaningful inflection point, not a continuation of decline.

The idea that acquisitions have diluted quality doesn’t stack up. Brand Architekts was acquired cheaply, integrated quickly and fixed decisively. Barry M has now been bought out of administration for just £1.4m against ~£15m historic revenue, with no legacy liabilities and immediate access to major retail distribution. That is highly value-accretive, strengthens scale in core value channels, and should be margin supportive over time.

At ~11x forward earnings, with net cash, a covered dividend, improving gross margins and a clear recovery narrative, the valuation looks disconnected from the fundamentals. The question isn’t whether FY25 was a tougher year — it was — but whether the current price still reflects that reality. In my view, it more than does. From here, the risk/reward looks skewed firmly to the upside, not capped by historic margin comparisons.

I don’t see this as “sugarcoating” at all. The acquisition and the trading update are directly related and logically announced together — Barry M was acquired out of administration, required court approval, and is clearly material enough to be disclosed alongside FY25 numbers.

On the trading side, the outcome is entirely consistent with the September reset. There are no new negatives, margins improved, H2 rollouts were delivered as planned, and the previously flagged headwinds (Bodycare, macro pressure, US tariffs) did not deteriorate further. That’s important after such a heavy de-rating.

Yes, FY25 landed slightly below the lower end of the earlier range — but that range was set before the full impact of those headwinds was known and already reflected in the share price collapse. The key point is that expectations were reset hard at H1 and this update does not introduce another reset.

What is new is a £15m revenue brand acquired for £1.4m cash, with strong UK shelf space and no liabilities, funded from a debt-free balance sheet with £18m cash. That meaningfully changes the forward picture.

After a 60%+ de-rating, the market was pricing in worse. This update removes downside uncertainty and adds upside optionality. The market will decide, but on the facts this reads far more constructive than the current valuation implies.

Post from ADVFN today:

With Friday trading now underway and no RNS this morning, it increasingly looks like the trading update is being lined up for next week rather than rushed out at the end of the week.

That’s not unusual, particularly with W7L now having two corporate brokers (Shore + Berenberg). Joint brokers typically favour a calm, well-supported release early in the week, allowing time for coordinated research notes, investor engagement and proper liquidity support — rather than dropping news late on a Friday into thin markets.

It’s also worth remembering that any genuinely negative development would have required disclosure as soon as it became known. The absence of a warning as we move through this window points more toward an update that is in line or stabilising versus the already-reset expectations, rather than another downside shock.

Expectations were cut hard at H1 and the shares have de-rated significantly on that basis. At these levels, a “trading in line / stabilising” update could already be enough to shift sentiment. Beyond that, there is clear upside optionality if H2 proves more resilient than feared — whether through better trading, steadier margins in a promotional environment, or early benefits from the ongoing UK, EU and US rollouts.

Add in easing short pressure and broader institutional support via the second broker, and the balance of probabilities looks more constructive than the current valuation suggests.

Timing doesn’t imply tone — but nothing so far points to urgency or distress. Risk/reward still looks skewed to the upside heading into the update, in my view. DYOR.