Verimark is spreading its wings overseas to boost its South African business. Photo: Simphiwe Mbokazi
Durban - Direct retail group Verimark on Tuesday said that introducing new products and increasing prices were the key factors that determined the success of the business in 2016, as the country's subdued economy curtailed consumer spending.

Chief executive Michael van Straaten said the group expected the economy to continue its downward spiral throughout the year and was looking elsewhere for growth to support its SA business.

Van Straaten said Verimark had reactivated its international trading strategy by exhibiting at four overseas trade fairs.

“Given Verimark’s proven ability to source and develop the latest and best selling innovations, the response from visitors and previous trading partners was positive,” he said. “This reactivation will over time increase revenue and profits for the business.”

Van Straaten said the group would exhibit in Venice, Italy, in three weeks' time as it had been well received in places like Barcelona, Munich and Frankfurt. The exhibitions had helped to generate more interest for its product in the European markets, he added.

“Our proven ability to innovate and adapt to the ever-changing economic and retail environment is key to the future success of our business. Despite South Africa’s downgrades to junk status, which will impact on the growth potential of the economy, we are optimistic about the future."

The group has over 40 years in the business and Van Straaten said it has been down a similar path before and emerged stronger.

Read also: Higher prices lift Verimark's bottom line

"We remain confident that the resilience of our business model and the overall talent of our people will allow Verimark to produce improved trading results going forward,” he said.

The group reported an increase of 1.9 percent in sales revenue to R439.1 million for the year to end February, mainly due to price increases in 2016.

The group said price increases were necessary at the beginning of February 2016 given the continued depreciation of the rand against the dollar, and as in the past five years, these increases impacted on the growth of its sales.

Profit before tax increased 184.7 percent from R13.1 million to R37.3 million, while headline earnings per share rose by 200 percent to 24 cents a share, up from 8c a share compared to 2016.

Verimark shares rose 32.86 percent on the JSE to close at 93c cents.