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Next Byte owner reports mixed sales results

ASX-listed Fone Zone and Next Byte parent increases overall gross margin but continues to report tough conditions in the Apple reseller market

ASX-listed owner of the Next Byte and Fone Zone chains, Vita Group (VTG), has attributed full-year profit margin increases to its cost cutting and business restructure regime. However, it continues to experience tough conditions in the Apple reseller market.

The group posted total pre-tax profits of $8.1 million for the year to June 30, up 27 per cent year-on-year. Net profits were also up 28 per cent to $5.4m. The results came off full-year revenue of $297.8m. This was down four per cent compared to 2008.

The company blamed tighter retail conditions for the slight decrease in revenue, but highlighted its ability to increase profit margins across the group over the past 12 months.

However, the Next Byte computing division saw gross margin fall from 20 per cent to 17.9 per cent year-on-year, triggering a 71 per cent drop in net profit to $700,000. Operating revenue for the full-year rose by 6 per cent to $128.5m.

While new iPhone, iPod and Mac books had been a great sales contributor, margins were lower, Vita said in the ASX statement.

Vita has made a range of operational improvements over the past year including a new business solutions division sourced from its Next Byte and Fone Zone bases, aimed at driving up enterprise and government sales. It also consolidated Next Byte services and repairs into hub locations and revised staff commission structures to bring down costs.

Over the past year, Vita closed 33 non-performing Fone Zone stores, bringing the national total down to 106. It also shut three Next Byte stores and now maintains 22 locations.

The business restructure presented Vita Group shareholders with a bright 2010, the company stated in its financial report. It recently signed a new five-year dealership agreement with Telstra, which will bring in an upfront $23.6m to the coffers, and became the first master licensee for the new Telstra T[life] concept stores.

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More about: Apple, Fone Zone, Next Byte, Telstra

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