Verimark targets offshore markets

Direct retailer Verimark says it is determined to revisit plans for international expansion in a bid to curb exchange rate vagaries.

Verimark is notoriously vulnerable to rand weakness as it cannot always pass on the higher cost of its mostly imported product lines to the local consumers.

Speaking after the release on Monday of strong results for the year to February, Verimark CEO Mike van Straaten said plans were afoot to identify possible offshore markets.

In the past financial year, no revenue was generated from international business.

Van Straaten said it was difficult to quantify the financial effect of an offshore thrust at this early juncture, reminding that 12 years ago Verimark traded in as many as 40 overseas countries. “Obviously, the bigger, the better. A medium-term target would be to generate 25% of revenue from offshore business.

“We would probably look at 30% to 40% of the business coming from offshore over the longer term,” he said.

The decision to pursue offshore business with vigour comes ironically not long after Verimark liquidated its start-up operation in Singapore.

Van Straaten stressed that the international push would entail a distribution model that marketed Verimark’s existing product range into various countries, including a strong drive into African markets.

Verimark recognised there were markets in Africa in which it was not yet represented that could “benefit from our combined direct-retail model”.

In another effort to mute the effect of a weaker rand, Verimark is also set to launch a locally manufactured range of cosmetics.

In the financial year under review, Verimark scored from strong sales in brands such as Bauer (cookware), Floorwiz and Genesis (cleaning equipment) as well as i-Play (educational toys).

Van Straaten said the strengthening of the average rand-dollar exchange rate enabled the company to keep selling prices the same as the previous year and, in some instances, reduce prices. Profit before tax increased 25% to R46.7m, with the dividend hiked by a third to 15c per share.

Van Straaten said 11 new Verimark Emporium stores were opened in the financial year. It was planned to open nine more stores in the new financial year.