The Investment column: Retail group still fragile

Betterware's management has worked hard to restore the catalogue retailing group's fragile reputation since 1993 when sentiment was hammered by ill-timed share sales by the controlling Cohen family. The shares have bounced from the low of 38.5p hit two years ago, but even after a 7.5p rise to 119.5p yesterday, the recovery seems to have petered out over the past 12 months.

There is clearly plenty for the City to remain nervous about. The reputation of Andrew Cohen, chief executive, took a knock after the share sales. With 46 per cent of the shares, his family is again set to be the chief beneficiary of the pounds 9.8m to be paid out under the new special dividend proposals announced yesterday. Even coming so close to the possible election of a Labour government, Mr Cohen probably deserves the benefit of the doubt, given that the possibility of a special payment was mooted six months ago.

More pertinent is the underlying trading picture at Betterware, which yesterday reported a 24 per cent jump in pre-tax profits to pounds 11.5m for the year to 1 March. The figures are complicated by losses in the previous year on the former plastic moulding business and another VAT repayment, which garnered pounds 1.25m in 1996/97.

But at the sales level, the company insists a slowdown in second-half growth in the UK from 16 per cent in the previous period to just 7 per cent last year is not to be taken as evidence of a maturing market. It remains confident it can achieve "high single-figure" growth over the next few years.

Even so, the real excitement must come from abroad. Europe could chip in pounds 1m to profits this year, while the Latin American joint venture with Avon, which moves into Brazil next month, could be contributing at least that much by 1998/99. Flat profits of pounds 11.5m in the current year would put the shares on a forward p/e of 16. High enough.