Johannesburg - Retail company Verimark Holdings [JSE:VNK]
on Tuesday reported diluted headline earnings per share of 6.9 cents for the six months ended August 2011 from 9.7 cents in the previous corresponding period.
Basic earnings per share were at 7c from 9.8c. Verimark said the decrease in its earnings was a result of a slight reduction in revenue and an increase in costs.
In light of the overall trading results and due to the fact that the group entered its peak trading period when cash was required to be retained in the business in order to fund operational needs, the board considered it prudent not to declare a dividend.
Revenue decreased by 2.2% to R196.2m because new product introductions were slightly slower than anticipated. Profit before tax was at R13.1m from 17.0m in 2010.
"In summary, the financial performance of the group over the interim period was down compared with the previous year. This was primarily the consequence of the business infrastructure being outgrown as a result of the exceptional growth recorded in the previous two financial years," CEO Michael Van Straaten said.
The group said it was committed to resolving the challenges related to its infrastructure and the control of expenses as soon as possible.
And although the slowdown in sales for the first six months was sharper than expected, the number of new products successfully tested and to be launched over the next six months - which included the Christmas trading period - is expected to reactivate Verimark's turnover growth.