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Vita keen to leave Telstra and pivot to the $5 billion ageing market

Business

Maxine Horne’s Vita Group has laid out plans to enter a $5 billion market to recover the company’s future prospects after the shock decision by Telstra to claw back its franchise stores.

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The Brisbane company will pivot from Telstra to ageing with a plan to open another 50 of its Artisan skincare stores over the next five years. It already has about 20 stores.

Under its contract with Telstra the 104 stores Vita owns will be clawed back by 2025 unless negotiations

The plans came as Vita produced an $18.4 million half-year net profit, helped by $12 million from JobKeeper, which the company is still receiving. A dividend of 5.6 cents a share will be paid. Its shares jumped 6 per cent to 93 cents on the announcement.

Horne said high-margin Artisan business was showing very strong growth, despite only starting the business in 2018. Its revenue for the December half was up 37 per cent to $15 million and it produced earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.2 million. It was largely unaffected by COVID-19.

“We are still growing this investment but there is proof the model will be successful at scale,” she said.

“We strongly believe there is room for significant growth. It’s a very attractive industry.”

She said there was also a need for the company to prove there was organic growth in the sector.

She said the business model for Artisan was aimed at the premium end of the market and using several different treatments to deal with ageing.

Vita’s ICT channel which is largely the Telstra stores produced an EBITDA of $40.5 million on falling revenue because of the restrictions from the pandemic.

Horne said she could not tell how long negotiations with Telstra over compensation would take, but both parties were keen to accelerate.

Horne said finalising the arrangement would allow Vita to put 100 per cent of its focus on Artisan.

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