Omegatrend calls in administrators

CLAREMONT-BASED network marketing group Omegatrend has become one of those rare victims of a boom, appointing voluntary administrators after a slump in sales. Cliff Rocke, Simon Read and Andrew Birch of PPB were appointed administrators of Omegatrend International Pty Ltd, Omegatrend Australia Pty Ltd and Omegatrend Global Pty Ltd last week. PPB ranked as the number one insolvency practitioner in the 2006 WA Business News Book of Lists, based on the number of registered liquidators and professional insolvency staff. Mr Rocke said the directors had become concerned about the business and run out of time to attempt a restructuring. The business employs 70 people and has between 1,000 and 1,500 active members from a database of 13,000 across Australia, New Zealand and parts of Asia. Omegatrend was a split off from Amway and started in 1990 when Loren and Sandra Watts set up the Western Australian-based rival in their home in the Perth hills to the global US-based group. It had expanded gradually outside Australia since the mid-1990s before attempting a fast-track growth push in the middle of last year. Mr Rocke said the business was struggling, with sales slumping to between $12 and $15 million a year because in boom times members were less inclined to supplement their incomes by selling Omegatrend products. “In boom times these direct selling industries suffer quite often because they are seen as a supplement to income in bad times,” he said. Mr Rocke added that there were few barriers to entry in this field and that new groups were constantly attempting to persuade members to join them. He said trade creditors amounted to about $2 million, an amount that did not include members, many of whom have points earned from sales, similar to a frequent flier program. “They [the directors] are looking at restructuring through a deed of company arrangement,” Mr Rocke said. Omegatrend expanded to New Zealand in 1995, Malaysia in 1997 and Singapore in 2003. Less than a year ago, Omegatrend took another major step forward with a Rapid Global Expansion Program under which new markets opened in Hong Kong, the Philippines, the US, the UK, South Africa and Brunei. Omegatrend offered an exclusive brand of products developed for the company and marketed under the brand Sanden Brook. The range offers included skincare and cosmetics, nutritional supplements, home care, seasonal gift lines and homewares. The selling message was that the products were delivered direct to the members’ doorstep and that by shopping this way members could also convert their household spending into income and rewards. Members could redeem points generated from sales through a variety of services such as telecommunications, mortgages, credit or charge cards, insurances and many others. Mr Rocke said the member response to the issues confronting Omegatrend and news of the appointment of administrators had been positive. Omegatrend has many rivals but the biggest remains Amway Corporation, which has been operating for more than 45 years and has extended its reach to more than 80 countries and territories.