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A massive slump in revenue has been offset by $12 million in JobKeeper payments to deliver a lift in net earnings for Telstra store retailer Vita Group (ASX: VTG) in the first half of FY21.
Vita Group has posted a net profit of $18.4 million for the period, up 27 per cent from a year earlier. This is despite group revenue tumbling 25 per cent to $323.7 million, largely due to lower customer traffic across its national Telstra store network.
JobKeeper added $12 million to the Vita Group bottom line, which the company says was instrumental in protecting jobs and will support the company's full-year result.
The company's key ICT (information, communications and technology) division's revenues fell 27 per cent to $307.8 million and EBITDA slipped 7 per cent to $40.5 million.
However, Vita Group managed to maintain momentum among its ICT business customers, with that division not materially impacted during the half year and revenues in line with the previous corresponding period. The Sprout accessories division was hit by lower hardware volumes.
After being rocked by the news earlier this month that from 2025 Telstra would not renew its long-standing contract with Vita Group for its Telstra store network, the company was at pains to emphasise the growth of its fledgling skin health and wellness business, Artisan, which delivered a positive underlying performance.
Artisan, which comprises 19 clinics, saw revenue lift 37 per cent to $15.1 million in the December half to deliver EBITDA of $2.2 million. That compares to an EBITDA loss of $800,000 a year earlier.
JobKeeper payments for Artisan totalled $1.1 million in the half-year.
Like-for-like revenues were up 10 per cent for Artisan which Vita Group ultimately plans to expand to a 70-clinic network. Vita Group says revenue gains were driven by organic growth including increased client visits and spend.
The market reacted positively to the result, boosting Vita Group shares more than 8 per cent this morning, although a shadow remains over the company's future growth channels with the impending Telstra pull-out to affect Vita's network of more than 100 Telstra retail stores and Telstra Business Technology Centres.
"We are pleased to have maintained profitability during a challenging period," says CEO Maxine Horne.
"Our progress in Artisan is strong and sustainable. The team has done an excellent job of managing our ICT channel and supporting Telstra customers despite COVID-19.
"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."
Vita Group has reiterated that it is in discussions with Telstra to ensure "a suitable transition of value for both parties, shareholders and team members". Telstra has stated that the transition relates to retail stores only.
Vita Group is paying an interim dividend of 5.6c per share.
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