Verimark takes search for profitability abroad
Verimark plans to start exhibiting in Europe in an effort to boost sales, as well as increase profitability.
|||Johannesburg - Listed direct retailer Verimark plans to start exhibiting in Europe in an effort to boost sales, as well as increase profitability.
The company said it planned to start with the exhibitions in four weeks as the weak rand and slowing economy dented its profitability.
Verimark yesterday released its financial results for the year to February, which showed profits before tax dropped 22.7 percent to R13.1 million, from R17m in the previous reporting period.
Chief executive Michael van Straaten said it was looking at turning the company around in two to three years’ time.
“We are not planning to open new stores, but we are going there to use already existing distributors for our products,” Van Straaten said. “We have learnt from our failure in Singapore… So we will be going there with limited risks involved.“
Van Straaten said it had received calls from distributors in Europe wanting its products and exhibiting in those markets was an opportunity for the company to re-establish itself internationally. “The past five years have been tough for an importing business like ours – strongly affected by the weakening of the local currency.”
The company said the continued depreciation of the rand over the last five years had affected its results negatively and drove up the cost of overseas purchases.
Van Straaten said it was encouraged by the sales growth in the second half of the year. “Sales revenue for the first six months was down 2.5 percent compared [to] the same period in the previous year, but up 9 percent in the second six months. The higher revenue was mainly due to better sales volumes,” he said.
Van Straaten said certain retail partners delivered impressive in-store growth on Verimark products year on year. “A further noteworthy achievement has been the exceptionally strong growth of 60 percent plus achieved through some of the largest retail partner stores during… December.“
Read also: Verimark cuts operating loss
Revenue from continuing operations was up 3.7 percent to R430.8m, compared with R415.4m last year. Headline earnings dropped to R8.6m from R11.2m a year before. Headline earnings per share fell 23.08 percent to 8c compared with 10.4c per share last year.
The company said the net asset value per share was 119.2c per share, slightly up from 116.8c during the corresponding period last year.
Van Straaten said the company would place emphasis on: increasing the pace of new products introduced; normalising margins that were eroded due to the weakening of the rand; and maximising operational efficiencies, as well cost containment in the year ahead.
The board declared a dividend for the year of 3.7c per share, down 29.11 percent compared with last year where the board declared a dividend of 5.22c per share.
Verimark shares dropped 2.22 percent on the JSE yesterday to close to 44c.
BUSINESS REPORT