In this kind of retail market, it makes sense to have a Plan B, but investors have taken a dim view of Vita Group founder Maxine Horne, injecting a little botox into her Telstra retail operator.
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Vita Group founder Maxine Horne. Photo: Dom Lorrimer
Vita, which owns Fone Zone, has watched its stock drop more than 20 per cent since announcing last month it had agreed to enter the superficial zone with the acquisition of Clear Complexions.
Vita shares continued to fall on Tuesday after it announced that the deal had been consummated.
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Matt Barrie of Freelancer. Photo: Louise Kennerley
It was great news for the Complexions team, which received $1 million worth of stock at these reduced prices, as well as $8.5 million in cash.
Let's not kid ourselves, Horne would not have considered such a drastic move if it wasn't for the fact that Andy Penn's Telstra has started to squeeze profit margins at its Fone Zone stores.
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So how do you sell your shareholders on the move from selling mobiles and broadband to chemical facial peels, skin peels, botox injections, body sculpting and tattoo removal?
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"There is great alignment between the two businesses ... both organisations are firmly focused on meeting customers' needs, and on delivering an exceptional customer experience," said Horne when the deal was announced last month.
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Illustration: John Shakespeare
The non-invasive medical medical aesthetics (NIMA) market is worth around $1 billion a year, it has high margins, a clear growth trajectory and the opportunity to consolidate a fragmented sector. In other words, it is the same opportunity that presented itself in the mobile phone retail business all those decades ago.
Horne backed her words with the purchase of 561,000 shares this month for just over $700,000, but it's small beer compared with the 25 million shares she sold last year for $92 million. History lesson
VTG Price at posting:
$1.17 Sentiment: Buy Disclosure: Held
