Betterware no alchemist
The Investment Column
Friday 28 April 1995
The rot started with the sale by the controlling Cohen family of 13 per cent of the shares in June 1993, but more serious problems started rolling in after the opening of the group's new £10m Birmingham warehouse in December 1993.
Part of Betterware's army of door-to-door salesmen and women began to desert and could not be replaced, hitting sales, while a lack of understanding of the new systems at Birmingham forced the group to take on expensive extra staff to take over where the machines had failed.
Yesterday's figures show the resulting horrors, with the position made worse by chairman Andrew Cohen's attempts to wrestle with the problems besetting the business.
Turnover has slipped from £63.2m to £58.3m in the 12 months to February, while pre-tax profits have crashed from £14.1m to just £1m.
The difficulties in Birmingham helped lift selling and administration costs by 38 per cent, while there was a £1.65m charge for centralising distribution and management in the European operations. With a £2m write- down on non-core businesses earmarked for disposal or sold, exceptional items came to £5.1m.
Mr Cohen believes they have been prudent and are now through the worst. Although sales in the main UK direct selling business fell 9 per cent to £45m last year, the position has stabilised, he says, and were marginally ahead in the first eight weeks of 1995.
But even if Betterware achieves £8m profits this year, the shares on a prospective price-earnings ratio of eight should be avoided.
The only hope for existing shareholders would be if a bidder mopped up the Cohens' 47.5 per cent stake as a prelude to a takeover.
That's some guestlist! Stunning images show huge dynastic wedding between Ultra-Orthodox Jewish families which attracted 25,000 guests
'Sickening, deluded and unforgivable': Bloody attack brings terror to capital’s streets
Anonymity order lifted for triple child killer David McGreavy jailed in 1973
World news in pictures
Far-right French historian, 78-year-old Dominique Venner, commits suicide in Notre Dame in protest against gay marriage
- 1 'Sickening, deluded and unforgivable': Bloody attack brings terror to capital’s streets
- 2 Mothers' diets may harm IQs in two-thirds of babies
- 3 Gay couple beaten in park urge MPs to moderate language on gay marriage
- 4 After woman sells virginity for $780,000, here are the results of our prostitution survey
- 5 Far-right French historian, 78-year-old Dominique Venner, commits suicide in Notre Dame in protest against gay marriage
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.