Johannesburg - JSE-listed direct retail group Verimark managed to turn around its business by reporting a R2.5 million profit for the six months to end August with price increases and sales growth boosting the bottom line.
Verimark reported a R3.64m loss in the six months to end 2015. The company said the turn in profits would allow its management team to build on the progress made during the period. Chief executive Michael van Straaten said the company’s focus was now on managing its expenses efficiently.
“The rand devaluation against the dollar resulted in a need to increase selling prices in mid-February 2016. As anticipated, these price increases impacted on sales growth, but together with well managed and contained costs, as well as an excellent product mix, it resulted in improved gross profit margins and net profit,” Van Straaten said.
Verimark also reported a 0.5 percent increase in revenue to R184.43m, up from R183.51m, while headline earnings per share were 2.2 cents per share compared with a headline loss of 3.6c per share during the corresponding period last year.
Variable and indirect expenses increased by 4.9 percent to R78.2m and Van Straaten said these costs were contained to below inflationary levels. He said had the rand not depreciated this much against the dollar, the results would have been much better.
“The products that we import might be the same price they were two or three years back, but it cost us more because of the weakening of the rand. We are actually paying 2.25 times more while the product in dollars remained the same after the rand depreciated by 22 percent in 2015.”
Van Straaten said he remained positive about the business as the company successfully exhibited in Las Vegas and Barcelona during the period.
“We participated in two trade fairs and the response was overwhelming, and we attracted a lot of attention... There are new business opportunities that we will announce in the long run as a result of the success of the exhibitions we attended.”
He said Verimark remained focused on the increased rate of new product introductions under its established and trusted brands and he expected the sales to increase as it approached the festive season.
“We are well prepared for this year’s Christmas trading period where sales are always traditionally more robust.”
The board didn’t declare a dividend for the period.
BUSINESS REPORT