Direct-response retailer Verimark blamed advertising spending for its
interim profit falling by more than half.

Sales for the six months to end-August grew 14% to R210m, but after-tax
profit plunged 56% to R1.1m from R2.5m in the matching period.

The retailer said its advertising costs increased by 85.7% to support an
increased number of products introduced during the reporting period.

“The financial benefits of this increase in new product introductions
will be seen in the months ahead,” Verimark said.

No interim dividend was declared. Verimark last paid an interim dividend
in 2006.

“Verimark has increased its inventory levels and its product mix to
ensure maximum revenue growth over the festive season,” the results statement
said.

“In the past six months, necessary costs were incurred through higher
inventory levels, increased advertising costs and store setup costs, which have
positioned the company well to deliver an improved second-half performance.”

Source: Business Day Live