Vita Group earnings decline 11 per cent

A reduction in the historic trailing commissions paid by Telstra also caused the telecommunications retailer's net profits after tax to drop 16 per cent

Following a reduction in the historic trailing commissions paid by Telstra, telecommunications retailer Vita Group (ASX:VTG) has posted a decline in earnings before interest, tax, depreciation and amortisation (EBITDA) of 11 per cent from $13.46 million to $12 million for the half year to 31 December 2010.

In a statement to the ASX, the company, which owns brands including Next Byte and Fone Zone, said the reduction was due to the transition phase of a new upfront commission structure being implemented.

Overall, net profits after tax also posted a 16 per cent decline from $7.5 million to $6.3 million.

The opening of a total 35 Telstra branded stores resulted in a 37 per cent increase in operating revenue from $144.8 million to $198.5 million for the six months ended 31 December 2010.

In addition, the company noted the revenue jump was also driven by stronger sales in the telecommunications division, due to more competitive pricing plans from Telstra.

“We have been very focused on rolling out the new T stores over the past six months, completing the first phase of 25 stores on time, and now rolling out the second phase of 25 stores,” Vita Group joint chief executive, David McMahon, said in a statement.

“Telstra’s current marketing and pricing initiatives have also led to improved store performance within Fone Zone as Telstra’s market share has improved.”

According to McMahon, Vita’s focus for the remainder of FY11 will be on the progress of its T store rollout, continuing the positioning of Fone Zone and improving service within Next Byte.

“In addition, this month we opened the first of Telstra’s recently announced 100 new format retail stores as well as opened a new Next Byte store incorporating Apple’s new global fit out for its reseller community,” said McMahon.

As reported by <i>Computerworld Australia</i>, the company posted a revenue loss of $5 million for the financial year ended 30 June 2010.

Follow Chloe Herrick on Twitter: @chloe_CW

Follow Computerworld Australia on Twitter: @ComputerworldAU

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