More in store

Verimark can gain traction if the rand holds. But that’s not all . . . there are dividends too

lmost three years ago to the day I penned a piece for the Financial Mail about direct retailer Verimark, where I argued the share could offer a rare yield opportunity for investors willing to risk shopping outside the mainstream retail stocks. Thankfully I won’t need to resort to semantics to wiggle out of this prediction, even though the distributions were not quite as sumptuous as I expected. Then again, who could have predicted the rand’s precipitous drop?

Two dividends were declared (including the financial year to end February 2016), making a grand total 8.9c/share over this three-year period. Perhaps readers who bought shares at 80c won’t be too pleased — I mean, who is, when faced with a capital loss of over 40%? But those who scooped shares at under 50c won’t be too unhappy with the yield.

Still, it is with some trepidation

Athat I approach Verimark again at the time of the release of its year to end February results. At face value the results were not fantastic, with earnings lower than last year’s. But the company was trading in the red in the interim period to end August 2015, so there was a dogged fight-back in the second half to register earnings of 8c/share. That’s a stout effort during a lean trading period when a competitor even went belly-up. The second half, it must be said, is the stronger trading period, and this time included some bumper Christmas month sales growth from Verimark’s “store-in-store” concept inside some of the bigger retail chains. Still, the profit performance puts Verimark, at the time of writing, on a trailing earnings multiple of around five.

The dismissive rating is understandable. Unlike other retailers, Verimark has been inconsistent in its earnings track