Consistent with most consumer businesses, Warpaint anticipates a significant fall in sales this year and has withdrawn guidance. However, it has taken action on costs using all available internal and external support mechanisms and the board believes it has the financial strength to withstand disruption until “at least the end of 2020” without needing any additional debt financing; on 08 April it had £3.3m cash and c£0.5m debt. As we noted 3 weeks ago, Warpaint looks capable of breaking-even in 2020 even if sales fell to c£30m (-40%) which appears to be an extreme scenario. The group is well placed to benefit from any improvement in conditions and there remains a big window of opportunity to complete/fulfil customer orders for the important gifting segment later in the year should COVID19 restrictions ease.
