Betterware hit by opening of new distribution centre

BETTERWARE, the door-to-door household products sales company, yesterday reported a 46 per cent fall in profits from pounds 7.6m to pounds 4m for the 28 weeks to 10 September, writes William Gleeson.

The poor performance came as no surprise to the City following a profit warning last month. The shares held steady, closing at 36p, down 1p.

Profits were hit by a combination of increased costs from the opening of a new distribution centre and lost sales due to teething problems there.

Turnover fell from pounds 34.4m to pounds 31.7m as a result of disrupted supplies to the door-to-door sales force following the opening of the centre. Problems included trouble with a computerised stock-picking system.

Peter Hartley, Betterware's finance director, explained that, typically, Betterware's door-to- door sales force was made up of housewives, paid commission only, who needed to boost family income from part-time work.

Mr Hartley said the fall in sales cost Betterware pounds 1.3m in profit while the new centre added pounds 1m to costs. 'We are now back on the straight and narrow,' he added.

Earnings per share fell from 5p to 2.53p. The interim dividend rises from 0.65p to 0.85p.