Shares in Warpaint London plc (LON:W7L) plunged in early trading Monday after the company warned that a “challenging” UK market would weigh on its full-year performance.
The cosmetics firm said it expected pre-tax profits for the full year to be between £8.5mln-£10mln with revenues of between £48mln to £52mln. Last year the company reported pre-tax profits and revenues of £7.7mln and £32.5mln respectively.
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However, Warpaint said the reported level of profitability would be “critically dependent” on the precise product and geographic mix of its sales for the remainder of the year.
The UK market, which comprised 44% of the group’s first-half sales, had seen “further softening” recently with retailers cutting back on stock levels and Christmas orders, meaning sales were lower than previously anticipated.
Warpaint added that a 60% jump in US sales as of 30 September and a 14% year-on-year increase in non-UK EU sales would not be enough to offset the decline in its core market.
Paul Hickman, analyst at Edison Investment Research, said Warpaint’s estimated earnings were now “around 25% lower on average than market consensus” and that the company had joined a “growing list of recent consumer IPOs that have had to warn on profit”.
Shares were down 40.2% at 122.5p.
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