Verimark changes focus to local as weak rand bites

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Verimark's headline earnings fell 57% over the financial year to February, from R17.6m to R11.2m. Its revenue dropped 2.7% to R415.3m from R427m over the period.

CEO Michael van Straaten said Verimark was trying to sell more local products as imports proved very costly when the rand was weak and the company was struggling to grow.

Over the past four years, the rand weakened 83%.

"We want to be more local with the goods we sell. We currently import about 95% of our goods. So, this is problematic because the rand has taken many hits for some years now.

"We basically did not grow the Verimark group in this financial period. We need to bring more innovative products to the market more quickly," Van Straaten said.

In order to counter currency threats in the future, Verimark would open stores abroad including in African countries, Van Straaten said.

"We have had a presence in many countries but this has not always meant that we were selling that many of our products in those countries. So, we could have had a guy in Germany selling two of our products. Realistically we need to open actual stores in other countries."

That strategy of offshore diversification had recently been to Verimark's detriment. Van Straaten said it would take a few months to exit Singapore where it had "failed miserably".

"Singapore just did not work for us. We didn't get critical mass. We have about 2,000 stores in SA but only managed to open 25 stores in Singapore."

Verimark planned to open stores in Africa and would make announcements. The group was also looking at opportunities in Russia and Australia, Van Straaten said.

Verimark's share price closed 26% up at 63c yesterday.

It had lost 16% of its value from 23 May last year to the end of yesterday.

Source: Business Day via I-Net Bridge