Profile: Andrew Cohen: For better and worse: Helen Kay takes a walk in Mr Betterware's doorstep empire
Sunday 22 May 1994
Like mutt, like master. Cohen reminds one irresistibly of an overgrown puppy. Even people in the City seem agreed that Cohen is 'a very affable guy'. As one retailing analyst puts it: 'You can't help but like him.'
Nevertheless, the City is not pleased with Mr Betterware. After what Sean Eddie, retail analyst at NatWest Securities, calls 'a cathartic year', the group will have to deliver reassuring news when it unveils its results tomorrow. It is expected to show pre-tax profits of about pounds 14m, up some 14 per cent. But the question is whether UK sales have improved.
Betterware's growth has, ironically, been aided by the recession. With millions out of work, it was easy to recruit part-time sales staff. The company has also expanded its product range, with a catalogue offering householders more than 400 items. But increasing penetration of the market, the fall in unemployment, and growing competition from rivals such as Kleen-E-Ze have all contributed to a slowdown in sales.
The stock market has reacted accordingly. In the past 15 months Cohen, 42, has gone from being a star to a scapegoat, as shares in the group, having reached a high of 278p in July, tumbled to their current 128p. Even so, those who invested in Betterware when it first went public in 1986 have seen a 1,200 per cent return.
The change of sentiment was exacerbated when it emerged that the Cohen family had sold 13 per cent of its 63 per cent stake for pounds 30m in June, when the shares were a respectable 230p. Yet only a few weeks before, Cohen had insisted he couldn't think of a better place to keep his money.
'Anyone who bought Betterware shares on the basis that the Cohens wouldn't dilute their stake was frankly naive,' says one analyst. But the news provoked a crisis of confidence in investors. The man dubbed 'Entrepreneur of the Year' a few months before by Coopers & Lybrand saw the door sharply closed on his foot.
Cohen was wounded by the criticism that followed and did not always handle it gracefully. A sell recommendation in this newspaper evoked accusations of anti- semitism. 'We'd enjoyed many accolades for a long time. One finds it difficult to accept criticism after that,' he admits.
The plunge in the share price also affected his paper fortune, wiping almost pounds 75m off the 51 million shares that the family still retains. Cohen claims this is irrelevant as the family has no plans to reduce its stake further. It is hard to be entirely convinced.
'In 1986, when we first floated Betterware on the USM, I used to look at the FT every day and get out my calculator to work out how rich I was. It's been a long time since I got out the calculator,' he insists. Yet this is the man who went into business at 17, aiming to make his first million by the time he was 21.
Trade was in Cohen's blood. He learned commercial nous from his father, Stanley Cohen, who founded a series of successful businesses culminating in Queensway Securities, the family company with interests in property and the manufacture of soft furnishings. Cohen senior's career took him all over the country, with the result that Andrew attended nine schools, both state and private. This migrant childhood did little for his scholastic achievements; his lack of interest in things academic did even less. Six 0-levels and one year of A-level studies later, Cohen talked his parents into letting him enter the family business. 'Every weekend, instead of going, like normal children, to the funfair, I'd go with (my father) to visit retail outlets or on buying trips,' he recalls.
Reluctantly, Stanley Cohen abandoned all hope that his son would become a solicitor or accountant and agreed to take him on. But there were to be no favours. Andrew was packed off to Scotland to work as a sales rep. 'I had an old Mini with 80,000 miles on the clock,' he says.
After six months humping stretch covers round the Highlands and Lowlands, he was convinced he could do better than many of his customers. So he persuaded his father to back him in building a chain of soft furnishing retailers. At 18, he opened his first outlet in Edgware Road, London, and in four years had 22 shops.
Cohen might have stayed a cushions and curtains man, building up subsequent acquisitions such as the Birmingham-based Wooltons chain into his own soft furnishings empire, but in May 1983 his father announced that he was going to check out a company called Betterware, in Romford, Essex, which had gone into receivership. It was primarily a retail outfit rather than a manufacturer, and might therefore be more to his son's taste. It was.
Cohen hopped on a train and went down to Romford to look at the company. What he discovered was an inefficient manufacturing operation with a superb brand. Everyone over 50, it seemed, knew the Betterware name.
He promptly bought the company for pounds 253,000 and within weeks had moved it to Birmingham. Then he closed down the tooling operation, contracted out production and computerised ordering. By the end of the year, turnover had reached pounds 1m, with profits of pounds 125,000 - half the company's purchase price. But even then, he says, he did not realise the true potential.
By 1986, Betterware's sales had touched pounds 5m and Queensway Securities, which had largely bankrolled its expansion, could no longer afford to finance this meteoric pace. So Cohen approached the City, and that October the Wooltons-Betterware group was floated on the Unlisted Securities Market, the junior stock market, with a market value of pounds 10.4m.
The float was a disaster. Although the family kept an 80 per cent stake, 84 per cent of the remaining shares were left with the underwriters. Cohen's relationship with the City is still volatile. 'The one thing he lacks is a recognition of what the City wants. Markets never congratulate, they discount,' says one analyst.
For some years, however, the market did congratulate Cohen, as he went on to sell Wooltons at the top of the market and to oversee a soaring performance at Betterware. In February 1993, nearly a decade after he had bought it, the company reported pre-tax profits of pounds 13.7m on turnover of pounds 56.3m. In the previous five years, it had averaged an annual 47 per cent growth in turnover and 61 per cent growth in profits.
The market rewarded Cohen's astuteness with an ever-increasing share price. He was also adept at talking up his own stock - with that combination of door-to-door salesman and doggy enthusiast. But he was juggling with too many things - a new distribution centre in Birmingham, a start-up in Spain, expansion in France. With the squeeze on sales and the dilution of the family's holding, it was enough to send the shares on their precipitous slide.
'I think I understand what's happened, but hindsight gives you great vision,' says Cohen ruefully. He has now bolstered the management team, leaving him free to concentrate on Betterware's European expansion. The company will open in Germany before the end of this financial year. It also has a presence in Ireland, the Channel Islands and Gibraltar, as well as in France and Spain. 'I want to see Betterware operating throughout Europe within five years,' says Cohen. Retail experts are confident he has an 'exportable concept'.
He is also very industrious. His motto, which hangs on a plaque at home, is Rien sans travail (Nothing without work). Cohen's French accent, it has to be said, is appalling, and it's a good job he employs others to stand on French doorsteps.
He has paid a price for this devotion to work. His first marriage - when he was 21 - ended in the mid-1980s. He has since remarried - and involved his wife, Wendy, in the group. She runs the Betterware Charitable Foundation, through which the firm gives 1 per cent of profits to charity. Cohen claims he has also learnt to put family first, although he concedes his wife might disagree. He attends clan meetings every Friday evening and talks to his five children every day.
On a tennis court he is reputed to be tough. A stray remark also reveals how competitive he is. Cohen has been suffering with rheumatism. 'I'm still playing but I can't run very fast, so I have to find weak opposition,' he laughs.
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