The effects of the COVID-19 pandemic weighed heavy on Vita Group’s information and communications technology (ICT) channel during the six months ending 31 December 2020, with the company’s half-year revenues declining by 25 per cent, year-on-year.
The Telstra store licensee’s revenues for the six months period came in at $323.7 million, while interim earnings before interest and tax (EBIT) was $28.1 million for the final six months of last year, a 27 per cent increase on the prior year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) (pre-AASB-16 lease depreciation) increased 23 per cent to $32.6 million and net profit after tax (NPAT) increased by 27 per cent to $18.4 million.
While the pandemic hit Vita Group’s Telstra store business, the company’s financials were buoyed somewhat by its burgeoning skin health and wellness business segment, along with the federal government’s JobKeeper subsidy payments.
The company’s underlying EBIT, excluding JobKeeper payment, decreased by 27 per cent, compared to the corresponding period the prior year.
The financials come at an interesting, and probably pivotal, moment for Vita Group, with Telstra announcing on 11 February that it would move to take full ownership of its Telstra-branded stores from franchise licensees. This includes independent licensees, which collectively claim 166 stores, and Vita Group, which owns and runs more than 100 Telstra stores.
The telco said it would start the process with Vita Group and its stores and follow that up by gradually making its way through the independent licensees, a process set to take 12-18 months.
Telstra's move means the non-renewal of Vita’s dealer agreement with Telstra on 30 June 2025, with the transition relating to retail stores only, thus not capturing Vita Group’s business ICT services segment, which will continue its focus on providing innovative mobility and IoT solutions to customers.
Vita said it and Telstra had commenced discussions to ensure a “suitable transition” of value for both parties, shareholders and team members.
Until the Telstra retail store presence changes hands, Vita expects the retail ICT market to remain challenging with COVID-19 impacts. Regardless, the company told shareholders it is well prepared to respond to the retail ICT changes and will continue to grow its Artisan business in the skin health and wellness sector.
“The team has done an excellent job of managing our ICT channel and supporting Telstra customers despite COVID-19,” Maxine Horne Vita Group CEO said. “We are about to embark on a new chapter. We have significant capability in running a national, dispersed network and delivering a premium experience, resulting in value for all.
“The Vita team are disciplined, focused and passionate about looking after our customers and I thank them for their hard work (historical and future) and willingness to adapt and evolve,” she added.