Johannesburg - Verimark has managed to trim its operating loss in the six months to August as its cost-cutting plans start to pay off.
However, the listed retailer warned on Monday that the rand’s continued weakness against the dollar was hurting it as it made an exchange loss of R1.5 million compared with a net gain a year ago.
In the first half of the year, Verimark’s revenue was flat, gaining 0.5 percent to R183.5 million as the company had to adjust selling prices to cope with the continued deterioration of the rand.
Verimark, which started out in 1997 with two people, noted it is growing sales despite the adverse economic conditions, but this is not the case across the board as - while most outlets grew sales - one slowed down, resulting in total sales gaining just 0.5 percent.
The listed company, which debuted on the bourse in 2005, noted its operating loss declined 26.5 percent to R2.98 billion, although its headline loss per share was flat at 3.6c compared with 3.7c a year ago.
However, it says its cash position has improved, gaining R4.4 million from February 28 and R17.9 million year-on-year, and sales revenue through retail outlets is showing improvement.
Verimark noted the first half was tough as consumer confidence weakened further due to higher interest rates, negligible economic growth and disruptions due to erratic power supply as a result of load shedding.
The rand’s continued weakness also meant it had to adjust selling prices, which affected volumes, revenue and profitability. However, it notes the efforts introduced over the last year to enhance sales are beginning to take effect with the value of products sold to consumers, through the till, at retail level increasing by nearly 6 percent.
“Despite the demanding external factors, the group remains focused on improving those internal factors over which it has some control, including the implementation of a stringent cost containment process and improving operating efficiencies.”
Verimark also expects to close its Singapore operation in the next few months.
No dividend was declared.
IOL