Warpaint London Reports 8% Revenue Growth in H1 2025 Amid Profit Decline and Acquisition Impact

Warpaint London H1 2025: revenue up, profit down – what’s really going on

Warpaint London has posted solid top-line growth for the six months to 30 June 2025, helped by its February acquisition of Brand Architekts. Margins improved again, cash is strong, but profits were knocked by foreign exchange movements and higher costs. Management has also trimmed full-year guidance given softer UK demand, US tariff uncertainty and a customer failure.

Key metric	H1 2025	H1 2024	Change
Revenue	£49.3m	£45.8m	+8%
Gross margin	45.0%	42.5%	+250 bps
Adjusted EBITDA	£10.8m	£11.4m	-5%
Profit before tax	£6.4m	£10.9m	-41%
Adjusted EPS	8.5p	9.8p	-13%
Cash	£17.0m	£5.5m	+209%
Interim dividend	4.0p	3.5p	+14%

Top-line growth with a margin step-up

Group revenue rose 8% to £49.3 million, with Brand Architekts contributing £6.1 million from 12 February. Under the bonnet, UK sales grew 15.9% to £18.0 million, international was up 3.2% to £31.3 million, and Rest of World surged 144% to £3.6 million driven by Australia.

Gross margin improved to 45.0% from 42.5% thanks to newer product launches, better sourcing, volume savings and friendlier freight and FX. Excluding Brand Architekts, like-for-like margin was 45.5% – up 300 basis points (bps, or 3.00 percentage points) year-on-year. That is the fourth consecutive H1 margin improvement, which matters because small margin gains compound quickly in a branded model.

Why profits fell despite better margins

Adjusted EBITDA dipped 5% to £10.8 million as operating costs rose to support growth – higher wages, rates, PR and marketing, a larger US sales team, and a higher bad debt provision. Profit before tax dropped to £6.4 million, mainly due to:

• £4.6 million non-cash foreign exchange losses on forward contracts – £2.7 million of these were unrealised at 30 June.
• £1.3 million exceptional acquisition and restructuring costs linked to Brand Architekts.
• Partly offset by a £3.9 million gain on “bargain purchase” (negative goodwill) from the Brand Architekts deal.

Quick jargon check: Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, adjusted for FX, share-based payments and exceptional items – a proxy for underlying cash profit. A “bargain purchase” gain arises when the fair value of acquired net assets exceeds the price paid.

Brand and channel performance: mixed picture

W7: flat overall, set up for H2

• W7 delivered £29.8 million revenue (60% of Group), broadly flat year-on-year.
• UK down 14% to £7.6 million amid weaker consumer confidence, but growth resumed post period-end with new retail space coming through.
• Europe down 3% to £17.6 million as some customers trimmed warehouse stock – expected to normalise in H2.
• US down 12% to £2.0 million, with tariffs pressuring margins. Management is prioritising ecommerce pricing flexibility while maintaining bricks-and-mortar presence.
• Rest of World up 159% to £2.6 million, with strong Australia momentum.

Technic: white label reset

Technic sales fell 15% to £12.4 million, largely reflecting a step back in retailer own-brand (white label) work after strong growth in 2024. Management takes white label only when returns are acceptable, so this reset looks intentional rather than structural weakness in the core brand.

Digital and close-out

• Direct online sales rose 48% to £3.4 million, now 6.8% of Group revenue. This includes £1.3 million from Brand Architekts’ brands.
• Close-out sales were £1.1 million, just 2% of Group – consistent with strategy to de-emphasise this channel.

Brand Architekts acquisition: early signs and synergies

Brand Architekts contributed £6.1 million of sales and £0.5 million of EBITDA since acquisition, at a 41.0% gross margin. Warpaint has already cut overheads, disposed of three non-core brands, and started cross-selling into Group customers. The deal was completed for £13.9 million total consideration and came with £6.2 million of cash, hence the bargain purchase gain of £3.9 million. Management still expects the acquisition to be earnings enhancing in 2025.

Guidance trimmed, but rollout engine revving

For the eight months to 31 August 2025, sales were £67.0 million (including £7.7 million from Brand Architekts) versus £63.5 million last year. However, the board now expects full-year revenue of £107 million to £112 million and adjusted EBITDA of £23.5 million to £25.5 million at £1/US$1.34. The reset reflects a weaker UK consumer, US tariff disruption, and the administration of Bodycare – a long-term Technic customer – with £0.5 million provided at period end and a further £0.3 million exposure post period.

The H2 plan is packed with distribution wins that should support the weighting:

• UK – Superdrug rolling W7 into 140 more stores, Tesco adding W7 impulse into 150 stores, Boots taking gifting into 350 stores for the first time plus accessories in 250 stores.
• Europe – Tigotà in Italy launching in 200 stores plus a capsule in 400 more, and Etos in the Netherlands expanding ranges across all 546 stores.
• US – W7 range expansion and a further 399-store rollout with CVS from August.

Balance sheet, cash and hedging

Cash stood at £17.0 million at 30 June 2025, up from £5.5 million, and the Group remains debt free with bank facilities undrawn. Inventories were £35.9 million, including £3.1 million from Brand Architekts, supporting service levels and growth. A new 94,000 sq. ft. warehouse was added under IFRS 16, lifting right-of-use assets and lease liabilities.

On currency, Warpaint began the year with US$57 million of forwards at $1.2912/£ and €2.3 million of euro sales hedged at €1.1627/£. The £4.6 million FX loss in H1 included £2.7 million unrealised on forwards; the subsequent move in GBP/USD to 1.3490 by 29 August reversed most of those unrealised losses, per management.

My take: the good, the bad, and what matters next

Positives

• Another strong gross margin step-up to 45.0% – and even better on a like-for-like basis at 45.5%.
• Healthy cash balance, undrawn facilities, and tight control of capital spending.
• Brand Architekts bought well – immediate cross-sell, cost take-out and a genuine bargain purchase.
• Distribution momentum into H2 across Superdrug, Tesco, Boots, Tigotà, Etos and CVS.
• Digital growth of 48% provides pricing flexibility, especially useful in the US.

Watch-outs

• Guidance downgrade signals tougher trading – UK consumer caution and US tariffs are not short-term quirks.
• W7 and Technic both declined in key regions during H1 – the promised H2 reacceleration needs to land.
• Operating costs are higher, and debtor risk has ticked up with Bodycare’s administration.
• FX remains a swing factor despite hedging – H1 shows how volatile it can be on reported profits.

What to watch in H2 2025

• Execution of the store rollout programme and space gains – do we see a clear sales inflection?
• US performance under the evolving tariff regime and the CVS extension.
• Brand Architekts’ profitability post-integration and geographic expansion beyond the UK.
• Like-for-like growth excluding Brand Architekts, especially in Europe where stocking patterns normalise.
• Cash conversion, inventory discipline, and any further debtor issues.
• Christmas gifting sell-through in Boots, supermarkets and European chains.

Dividend and shareholder returns

The interim dividend is up 14% to 4.0p per share, payable on 21 November 2025 to shareholders on the register at 7 November 2025. The decision signals confidence in cash generation despite the softer outlook.

Bottom line

Warpaint is navigating a tougher consumer and US tariff backdrop with a stronger margin engine, a bigger brand stable, and meaningful distribution wins lined up for H2. The guidance cut is a reality check, but the balance sheet gives room to execute. If the second-half rollout delivers and FX headwinds ease, the set-up for 2026 could look brighter than today’s headlines suggest.