British women spend almost £2billion a year on make-up, Americans spend ten times that amount and beauty products are increasingly popular among metrosexual men as well.
The market is big, growing and best known for expensive brands. Warpaint is very different.
Founded by a couple of West London go-getters in 1992, the group produces affordable cosmetics, generally sold for about one-fifth the price of upmarket equivalents.
Makeover: Women in the UK spend £2billion a year on make-up
Initially, founders Sam Bazini and Eoin Macleod focused on selling their wares to discounters, a strategy that persisted for many years.
In 2020, however, the duo upped their game, adding mainstream retailers to their roster both here and overseas. Today, customers include Tesco, Boots and Superdrug, as well as Walmart and CVS in America and several European chains.
As Warpaint moves into new stores, sales and profits grow. Last week, the group unveiled a 25 per cent gain in first-half revenues to £46million with profits up 75 per cent to £11million.
Full-year figures should be impressive, too, with brokers forecasting sales of £105million, profits of £24.5million and a 31 per cent increase in the dividend to 11.8p.
Best-sellers include Hot Shot lip plumpers, strawberry-flavoured lip masks and Golden Glow bronzing drops – all at prices designed to tempt the most cost-conscious shopper.
Lower prices are not a sign of low quality, however. Rather, Bazini and Macleod adopt a frugal approach to expenses and spend far less on marketing and promotion than more upscale brands.
They also prefer to expand at a steady pace, moving into a few stores at a time when they sign up new customers so they can assess what works best and ensure orders are fulfilled on time.
In 2020, for instance, Warpaint gear could be found in just 50 Tesco stores. Today, it is on sale in 1,400, with Boots and Superdrug on a similar trajectory.
This gives plenty of growth potential. In the UK, for example, the firm has 20 key customers with 13,000 stores.
Warpaint goods are in just over 6,000 of them so far but there are plans to be in many more.
America and the EU present even greater opportunities, provided expansion is measured and controlled.
MIDAS VERDICT: Midas recommended Warpaint in 2017, when the shares were £2.22. Profits have more than tripled since then and the stock has soared to £5.57.
Some investors may be tempted to bank some gains but it is worth noting that Bazini and Macleod still own more than 40 per cent of the business and remain deeply committed to its continued success. That makes these shares a strong hold.
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