New Image for fallen Aussie beauty marketer

Listed health product manufacturer New Image Group has negotiated with administrators to buy failed Australian beauty product marketer Omegatrend International.

New Image said yesterday that it would buy the business through its direct selling division - in which people set themselves up as distributors and buy products at wholesale prices for personal use or to sell for profit.

Financial difficulties brought about by falling sales and cost overruns on market development projects and computer systems led to administrators being voluntarily appointed to Perth-based Omegatrend at the start of May.

New Image chairman and founder Graeme Clegg said he was confident the business could be turned around.

"The compensation plan (which returns a proportion of profits to wholesale buyers based on purchased volume) is being adjusted, the board of the public company will control all of the decisions that are being made, there'll be rationalisation of costs and there will be expansion into the market-place - all positive things that will ensure Omegatrend is profitable and growing."

The transaction, which requires final approval from creditors, would include the retention of all Omegatrend staff and management and the assurance of future network commission payments.

Auckland-based New Image has offices in Australia and five Asian countries. It is also involved in biotechnology research, manufacturing and marketing including colostrum products and extracts.

The New Image Group had revenue of $6.6 million for the 15 months to June last year, but lost $839,000.

Omegatrend, which also markets home-care and nutritional supplements, is a significant company in the Australian market and had expanded in NZ and Malaysia

Its sales peaked at A$60 million (NZ$72.4 million) a year from more than 100,000 representatives.

Merging the two businesses would bring commercial advantages from better utilisation of offices, distribution facilities, management and product inventory and an increased sales momentum, Clegg said.

American rivals had a home market of about 300 million people, compared with about four million in New Zealand.

"Obviously, we haven't got the home market to support the type of growth that we are looking at," Clegg said. "In our business, we're looking at 30 to 50 per cent growth a year [in the direct selling division] while we're in that growth phase and with expansions into new countries."

As part of this push for growth the combined company would focus on Asia.

"That's where the future wealth of the world is, and the markets we're looking at are Japan, Korea, India, China and north Asia, and that's where network marketing is very powerful," Clegg said.

Shares closed up 8c yesterday at 17c.