Recession bites into Vita's Next Byte and Fone Zone results

Stuart Corner
Sunday, 30 August 2009 14:02

IT Industry - Strategy

Vita Group (ASX: VTG) - which operates the Fone Zone chain of Telstra mobile dealerships and the Next Byte chain of Apple retailers - has reported revenues of $297.8m for FY09, four percent down on FY08; EBITDA of $13.9m, down 21 percent; and NPAT of $5.4m, down 28 percent.

The company said that, like most retailers, it had experienced difficult trading conditions in FY09 and that these had occurred across Fone Zone and Next Byte. It said the reduced earnings were "primarily due to strategies adopted in response to the difficult economic conditions including one-off restructuring costs associated with the company's store optimisation and overall cost reduction programmes."

During FY09 37 underperforming retail stores were closed: 33 Fone Zone and four Next Byte stores. One new Fone Zone and three new Next Byte stores were opened.

Joint CEO, David McMahon, said: "We have...focused on reducing costs, integrating Next Byte [acquired two months into FY09] and streamlining operations generally."

The business teams of Next Byte and Fone Zone have been combined "into a single, focused Business Solutions division which focuses on education, corporate and government clients for telecommunications and computing equipment."

Vita announced last week that Fone Zone had renewed its dealer agreement with Telstra for another five years with potential for up to four one year extensions and that it (Vita) had been appointed the first master licensee for Telstra's T[life] stores, allowing it to roll-out T[life] stores in a phased approach, subject to meeting performance and expandability criteria. The location of the first 25 stores has been agreed and these will open over the next 12 months.