Betterware shrugs off slump with 94% profit increase

BETTERWARE, the fast-growing door-to-door sales company, continued to shrug off the recession last year, announcing better-than-expected profits yesterday. Despite the improvement, the company's shares fell 4p to 256p.

Walter Goldsmith, chairman, outlined plans to expand the company's operation to Spain. 'We have entered 1993 in a strong financial position, knowing where growth is coming from. Initial indications in the first quarter support our optimism', he said.

Helped by a pounds 1.5m VAT refund, pre-tax profits of pounds 13.7m in the year to February were 94 per cent higher than in the previous year, from sales up 35 per cent at pounds 56m. The core door-to-door household products turnover showed an improvement of 52 per cent.

Earnings per share of 8.4p were 71 per cent higher than in 1992 and a final dividend of 1.5p makes a total for the year of 2p, an increase of 64 per cent.

Betterware, which employs only 200 permanent staff, sells low-ticket household goods through 10,000 distributors, up from 7,000 during the period. Paid on commission, they visit homes three times in an eight-week cycle.

The company plans to take on a further 3,000 to 4,000 sales staff this year to increase penetration from the current one-third of the population. It is also planning to introduce new catalogues more frequently and to increase the proportion of products like soap powders.

The new French operation moved into profit in its first year and currently employs 850 distributors, with recruitment running at about 100 a week. Andrew Cohen, chief executive, said that an operation would open in Spain this year, with a further European country next year.

Yesterday's consolidation follows a rapid increase in the share price since last July, when it was 110p. BZW, the house broker, expects profits this year to reach pounds 17.5m, putting the shares on a prospective p/e of 22.