2010/05/10

 

Specialist retailer, Verimark Holdings Limited, has pulled off a remarkable turnaround in its business for the year ended 28th February 2010.

Verimark’s long promised turnaround saw revenue increase 38% over the previous year to R347,5m; pre-tax profit jump to R20,2m from a previous R4,2m loss; after tax profit rise to R13,6m from a R3,7m loss the previous year and cash inflows from operating activities of R38,5m compared to cash outflows from operating activities of R5,8m in the previous period.
 
This impressive recovery saw Headline Earnings Per Share come in at 12,4 cents a share compared with a Headline Loss Per Share of 3,4 cents the previous year.

Due to Verimark’s improvement in profitability, a final dividend of 6 cents a share has been declared.

Well pleased with the company’s performance, Verimark CEO, Michael van Straaten, says:

“Not only has Verimark returned to profitability during this past financial year, but the last six months of the trading year saw the company deliver its best financial performance in its 33-year history.

“Given this strong turnaround, which mainly took place in the last six months of the year, the company is cautiously optimistic that the new management team is now ready to continue Verimark’s successful track record of the previous 3 decades.”

It’s interesting, he notes, that trading in the first and second halves of the financial year was distinctly different. In the first half of the financial year the downward trend of the previous three years continued. However, trading in the second half of the financial year resulted in a pre-tax profit of R31,2m – showing the strength of the turnaround in sales.  

Van Straaten notes that Verimark and its staff have worked extremely hard to deliver on its promise of effecting a turnaround in the business. In the process, virtually the entire management team, with the exception of van Straaten, has been changed.

The main driver of the company’s improved profitability was the surge in product sales – especially over the last six months of the year. Sales in that period increased by 47% when compared to the previous period in 2009.

Sales improved, says van Straaten, due to the further introduction of new products, improved space utilization at retail outlets and the conversion of selected Verimark franchise outlets into corporate stores.

Selling expenses increased approximately in line with sales over the period, as did other operating expenses.

Included in the total expenses were some once off costs, which, if excluded would result in Verimark’s “normalized” Earnings Per Share coming in at 19,9 cents compared to the prior year’s “normalized” loss of 2,1 cents a share on a like for like basis. 

Says van Straaten:

“As we have successfully turned around the business, the future looks promising. The increased level of sales in the last half of the previous financial year has continued into the new financial year. This surge in sales has resulted in additional space being committed to Verimark by some of the major retail chains. This, together with our plans to expand the Verimark Direct store concept, certainly bodes well for the future growth of the business.”
 

 

 

Verimark: Turnaround on track
2010/02/25 08:47:00 AM
 

Johannesburg - Retailer Verimark Holdings advised Thursday that its headline earnings per share and basic earnings per share attributable to ordinary shareholders for the year ended February 2010 are expected to be at least 9.3c and 9.2c, respectively, compared to a headline loss per share and a basic loss per share of 3.4c and 3.3c, respectively, for the previous comparable period.
 

Verimark said the improvement in its profitability is due to better than expected sales, which for the last half of the financial year increased by approximately 47%, when compared to the same period last year. This increase came about mainly in the last few months of the period under review.
 

The improved sales performance was due to the further introduction of new products and improved space utilisation. In addition, focused cost control further added to the profitability.
 

"The uncertainties around the ability of the new management team to effect the turnaround is now something of the past given the improved trading results over the last few months. The company remains cautiously optimistic that the long awaited turnaround is firmly on track," it said. 
 
An updated trading statement will be released once the company is able to quantify, with reasonable certainty, the expected range of the profit improvement, it said.

- I-Net Bridge