Betterware issues second warning after poor summer: Turnover falls as hot weather distracts part-time sellers

BETTERWARE, the door-to-door seller of household products, issued its second profits warning in three months yesterday, writes Robert Cole.

Betterware shares fell to their lowest level since May 1991, closing down 23p, or 31 per cent, at 50p.

Andrew Cohen, chief executive, said the company had encountered problems opening its new distribution centre in Birmingham. As a result, he said, operating profits for the half-year to 10 September had fallen to pounds 4m, compared with pounds 7m last time.

Mr Cohen said that the disruption caused by the move meant Betterware lost sales agents. He added that the company had hoped to win back agents, who work on a part-time basis and are paid on commission, during the summer, but the hot weather had provided more attractive diversions for potential sales people.

Betterware said that UK turnover had declined by 9 per cent. Profits, however, fell by 43 per cent.

Analysts queried the disproportinate fall in profits compared with sales. Some wondered if the introduction earlier this year of new pay incentives had backfired. They suggested that Betterware might have set sales targets too low, and then been obliged to pay out more than it expected in bonuses.

Betterware also announced plans to expand into Latin America yesterday. Mr Cohen said Betterware had entered a 50/50 joint venture with Avon, the

direct seller of cosmetics.

The new joint company will recruit new agents, and sell only Betterware products. Avon will provide the management infrastructure.

See View From City Road