By Chris Nicholls
SYDNEY: Vita Group, owners of the Fone Zone and Next Byte retail chains, has followed Clive Peeters’ warnings this morning by announcing they expect a fall in earnings compared to previous predictions.
In a release to the ASX today, Vita Group said expected EBITDA for FY08 would fall in the $18-19 million range, down $5.5 million dollars on previous forecasts, which predicted earnings of between $23.5-24.5 million.
Vita Group chief executive, David McMahon, said the “widely reported decline in consumer retail spending in recent moths appears to be delaying the replacement of existing mobile phone handsets and has led to a decrease in revenue and profit for the Fone Zone business”.
The company’s money issues mean it will relocate some stores and convert some to the more profitable Next Byte Apple reseller brand. “A number” of underperforming stores will close, McMahon said in the statement.
However, speaking to Current.com.au, McMahon said the process was under review, and any closures, relocations or re-bradging of stores would only take place after the review. He said he was hopeful no stores would have to close, and could either be re-located or re-badged, but said he could not comment further until the review process was complete.
The store closures, relocations and re-fittings will mean Vita takes a $1.5-2 million hit in profits for this year.
Next Byte is, McMahon said, performing ahead of expectations with further expansion planned.
McMahon also said while no formal announcement had been made by Apple Australia, he did not expect the iPhone to be sold through Next Byte stores, based on the iPhone’s overseas retail strategy to date.