VITA GROUP DIVERSIFIES INTO SKIN TREATMENT BUSINESS IN $9.5M DEAL

Written on the 19 October 2017 by Ben Hall

VITA GROUP DIVERSIFIES INTO SKIN TREATMENT BUSINESS IN $9.5M DEAL
VITA Group (ASX: VTG) has undertaken a major change in direction with the $9.5 million acquisition of non-surgical cosmetic treatment business Clear Complexions.

The purchase marks Vita's entry into the non-invasive medical aesthetics market (NIMA), estimated to be worth $1 billion a year in Australia, as it looks to diversify away from its current core operations as a Telstra retail store operator.

Vita Group CEO Maxine Horne says the decision to acquire Clear Complexions was made due to the brand's premium service offering, and the opportunity for Vita to apply its "core competencies" to drive further growth, scale and profitability.

"There is great alignment between the two businesses, and we see Clear Complexions as being a good cultural fit with Vita, which is of key importance to us," Horne says.

"Vita brings significant experience to the table, with 22 years in retailing and well-embedded competencies, including a strong focus on consultative selling and execution.

"Vita has scalable frameworks, processes and systems that can support Clear Complexions' growth.

"Vita's skill sets, combined with Clear Complexions' significant industry experience and customer focus, will be a distinct advantage in the NIMA market, and will create a strong platform for future growth."

In April, Fairfax Media reported a leaked internal Telstra memo revealed Australia's biggest telco wanted to take back 11 stores operated by Vita Group.

The document allegedly contained information that Telstra could operate these stores more profitably, given it would not have to pay commissions to licensees.

The Brisbane-based Vita Group operates 105 Telstra stores, 21 Telstra business centres, its own ICT brand, a technology accessories brand called Sprout and SQDAthletica which is a men's athleisure wear brand.

Vita and Telstra have agreed to change their terms with an agreement that takes them through to 2023.

Clear Complexions was established in 2005 as a single clinic and has grown to a network of six clinics across Sydney and Canberra with a highly skilled team of 60, including 35 registered nurses.

The acquired business is anticipated to deliver annual revenue of around $10 million, and earnings before interest, tax, depreciation and amortisation (EBITDA) of over $1 million in the year post acquisition, with further growth anticipated in the future.

VTG shares dropped nearly four per cent on the news from $1.55 to a close of $1.49 on Wednesday.

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Author: Ben Hall

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