The Vita Group Ltd (ASX: VTG) share price is trading up today after the company announced its half-year results. Let’s take a look.
The post Vita Group (ASX:VTG) share price up on results, despite Telstra woes appeared first on The Motley Fool Australia. –
The Vita Group Ltd (ASX: VTG) share price is moving upwards today on the back of the company’s first-half results. This is despite Telstra Corporation Ltd (ASX: TLS) spelling the end of its current dealer agreement with Vita, disclosed last week.
What’s moving the Vita Group share price today?
Profits buoyed by JobKeeper
Today’s half-year results for Vita Group portray a challenging half for the company. Revenues dropped 25% to $323.7 million due to retail ICT and accessory volumes impacted by COVID-19.
On the other hand, the company’s pivot towards its skin health and wellness (SHAW) segment showed strong organic growth. Artisan Aesthetic Clinics experienced a 37% lift in revenues compared to the prior period. This result stems from an increase in client visits and clinic numbers. Additionally, clients have increased their average spending per visitation.
Shareholders might have caught themselves cheering for the increase in earnings before interest, tax, depreciation, and amortisation (EBITDA). In contrast to the company’s revenue, EBITDA increased by 23% to $32.6 million.
However, the result isn’t all cheerful – a contributor to this increase was the inclusion of JobKeeper payments. To be precise, the group received net payments of $12 million from the federal government. Underlying EBIT, when excluding JobKeeper actually fell 27% to $16.1 million.
Telstra uncertainty in the mix
With the announcement of Telstra’s intention to transition to a full ownership model for all of its stores, the future looks murky for Vita. Vita currently operates a total of 104 Telstra retail stores on behalf of the telco giant. The current agreement will conclude on 30 June 2025, so the clock is ticking for the next 4 years.
Vita continues to ensure it is in discussions with Telstra to facilitate a suitable transition arrangement. But a week has passed, and no further details have been provided on this front.
Currently, Vita has stipulated it will continue to manage its Telstra store network in the meantime. Shareholders are anxiously awaiting further information considering the large percentage of revenue derived through its partnership with Telstra.
CEO Maxine Horne commented on the result and outlook for the company:
We are pleased to have maintained profitability during a challenging period. 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. 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.
A dividend for your troubles
Vita Group also announced that it will pay a fully franked interim dividend of 5.6 cents per share. This time last year Vita skimped out on a dividend payment to take a conservative approach during the peak of the COVID-19 crash. Today’s announced dividend represents a 7.7% increase on the interim dividend paid back in 2019.
At the time of writing, the Vita Group share price is sitting at 93 cents, up 6.29% in morning trade but down 25% on this time last year.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
- Why the Whispir (ASX:WSP) share price is surging 10% higher today
- 2 high yield ASX dividend shares to buy today
- Telstra (ASX:TLS) full year dividend for 2021 expected to be 16 cents per share, fully franked
- Morgan Stanley: ASX earnings season is topping expectations
- 3 reasons the Telstra (ASX:TLS) share price is storming higher
Motley Fool contributor Mitchell Lawler owns shares of Vita Group Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.