Maxine Horne isn’t resting on her laurels.
Australia’s richest female chief executive has just recorded the “best year ever” for Vita Group, the business she co-founded, with turnover of just under $675 million and EBITDA of $65 million.
Vita Group already operates 103 Telstra-branded retail stores, 21 Telstra Business Centres and one Fone Zone outlet, along with phone accessories brand Sprout and Athleisure brand Sqd Athletica but Horne wants to expand further.
“We are known for being a telco retailer and that’s a very profitable part of our business but we do have aspirations to take our core competency, which is consultative selling, into other categories,” she says.
Horne won’t say exactly which categories Vita Group is looking at but says the business’ new direction will be in retail and will encompass certain characteristics.
“The characteristics are a high margin category in the beginnings of its growth evolution and which is highly fragmented and ripe for consolidation and lends itself to consultative selling because it is a little bit complicated in nature,” she says.
The university of life
Born in the United Kingdom, Horne left school when she was just 16.
“People say to me ‘What university did you go to?’ and my response is ‘the university of life’,” Horne says.
She worked in telecommunications, where she met her ex-husband David McMahon and the pair were headed to New Zealand when they got side-tracked by Queensland.
“It was just the weather, it really was the lifestyle,” says Horne. “Even now I sit on the beach, particularly when my kids went through Nippers, and I just have this smile on my face.”
Horne and McMahon opened their first Fone Zone store on the Gold Coast but the reality of running a small business turned out to be quite different to what the couple had envisioned.
“We had these illusions of putting the sign up ‘gone for an hour’ and going for a surf,” Horne says. “We were very naive when we started the business. I learnt very quickly that you don’t get to do that.”
There are a number of things as a female you have to put up with and tolerate and let go to the keeper.
Horne says running the business was much harder than she expected, but by keeping costs down it began to thrive.
“One of the things that really worked for me is I came from a very poor background and was very frugal with my money and I ran the business like that,” she says. “Which is OK when you have more than one store but when you start to scale you can’t physically be everywhere at the time. We were working seven days a week until I realised I couldn’t do it all. That was a real turning point to bring people to the business. It’s a lot easier said than done. When you are the owner and you have everything on the line you want to be in control of everything.”
Growing Vita Group
Horne credits Vita Group’s success as stemming from her previous experience in telecommunications and entering the market at the right time.
“Any business has a bit of luck,” she says. “Yes you have a well designed strategy and the people behind you but you also need luck. My luck was I had worked in an industry that was growing quickly. I got to make a few mistakes without it crippling the business.”
Horne says high margins have allowed the business to grow.
“You have to have high margins,” she says. “If you don’t have high margins you can’t make mistakes and importantly you can’t invest in the business.”
Horne and McMahon split in 2012 and Horne says there are challenges being a female in a male dominated industry.
“There is definitely a level of scepticism to begin with but when people believe you do your job well there is a level of respect,” she says. “There are a number of things as a female you have to put up with and tolerate and let go to the keeper. There are a number of meetings where I have wanted to probably provide feedback or object to something but at the end of the day you have to think ‘Why are we having this meeting? What’s the end game?'”
Shoring up the Telstra relationship
Despite flagging an expanded vision for Vita Group, Horne says telecommunications is still its key focus.
“We have one little Fone Zone left, which is kind of sad but it is inevitable,” she says. “A few years ago we identified the consolidation in the marketplace and got ahead of the curve. Unlike some industries that might have come to the end of their heyday, the desire and concern for telecommunications is greater than ever.”
Vita Group’s ongoing relationship with Telstra is key to its success, with Vita Group’s share price tumbling from a high of $5.35 in September 2016 after concerns the telco giant was considering taking back control of some of its store network from its biggest retailer.
Horne came under some fire for selling 25 million shares for $92 million when the share price was at its peak to diversify her wealth, but she is sanguine about the changing landscape.
“Every three to four years there is a change in the business,” Horne says. “The telecoms industry is going through quite a bit of change, a lot of macro elements are evolving, we have sat back and reviewed where are we taking this business.”
For now the relationship is secure, with Vita Group and Telstra agreeing to changes to the terms of Vita Group’s master licence agreement and extending it to June 30, 2023.
Vita Group shares, while still a long way short of their high, have bounced back to $1.70.
“Just because you have nailed it for the first couple of years, don’t think you can sit back and say ‘I’ve made it’,” says Horne. “You have to be prepared to evolve your business as things change at a macro level.”