The Vita Group Limited share price just fell 11%: Is it time to buy?

Unfortunately for its shareholders, the Vita Group Limited (ASX: VTG) share price has been one of the worst performers on the market once again.

At the time of writing, the retailer’s shares are down almost 11% to 98.5 cents. This brings its year-to-date decline to a whopping 70%.

What happened?

With no news out of the retailer, it is a touch unclear why its shares have fallen so sharply today.

While the company has unfortunately had key information leaked in the past, there appears to be nothing of that nature this time around.

Instead, I would suggest this is merely a spot of profit taking. After all, Vita’s shares rallied strongly yesterday after it emerged that one of its director had been buying shares.

Should you invest?

There is no denying that its shares appear dirt cheap right now at just over 4x trailing earnings.

However, it is very difficult to forecast what the company’s future earnings will look like after Telstra Corporation Ltd (ASX: TLS) makes changes to Vita’s remuneration.

While nothing has been finalised yet, at this point in time Telstra intends to “reduce remuneration by approximately 10 per cent. It also announced an intent to reduce remuneration by a further 10 per cent at the start of each of the FY19 and FY20 financial years.”

I think that this proposal, along with a potential reduction in its store network, makes Vita Group one to avoid.

While it may recover and provide brave investors with strong gains, at this point in time there are just too many unknowns which make it an unsuitable investment.

Which is a shame because Vita Group used to be a great option for income investors. Investors on the look out for dividends might now be better off with this quality dividend share instead in my opinion.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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