Sing it, Systemax: 10 straight quarters plunging in a row, 10 straight quar....
Sales FINALLY on rise for reseller... by 1.4%
Shape-shifting mega reseller Systemax has finally broken its run of top line wobbles after 10 consecutive quarters but the US titan still couldn't turn a churn out a profit in its calendar Q2.
The New York Stock Exchange-listed dealer last night reported low single-digit sales growth of $831.1m, representing a rise of 1.4 per cent in constant currency based on the same period a year ago. But hey, growth is growth.
What hasn't changed for the firm is that B2B sales are still hogging growth, so it seems that rising US consumer confidence has yet to translate into higher retail spending in Systemax stores.
The B2B wing of the company - trading as Misco in Europe - posted a sales hike of 10.1 per cent to $626.1m with the operation in EMEA rising 9.1 per cent to $277.1m, up 5.5 per cent in North America to $205.5m, and up 19.8 per cent in Industrial Products to $142m.
During the quarter, Systemax took on SCC's Dutch division for an undisclosed sum, adding additional but relatively low level remote monitoring, logistics and assembly, maintenance and managed print services to the portfolio. The reseller is trying to move away from standard box shifting into a world that consumes tech as a service.
The Netherlands unit grew two per cent to €103.7m in the year to 31 March 2013 and was described by previous owner SCC as "sub scale" for its ambitions to be a market leader in core geographies.
In a conference call with financial analysts last night, CEO Richard Leeds, said he is "encouraged by the recent trends" in the B2B business on both sides of the Atlantic, the expanded services biz and the Shared Services facility in Hungary.
The man was less enamoured with the showing on the consumer side of the house where sales declined by nearly 13 per cent - for the 14th straight quarter - down 12.9 per cent in constant currency to $205m, albeit better sequentially.
"Our performance remains weak and the operating environment challenging. We remain focused on bringing this business back to sustained profitability and the efforts to optimise our performance are ongoing," said Leeds.
Losses in consumer narrowed, the company said, after a period of cost-cutting. There are now 34 stores in the UK compared to 39 a year ago.
This showing in retail came as a private research group, The Conference Board, noted via its consumer index that confidence among shoppers is at its highest since October 2007.
The cost of sales went up 3.1 per cent to $707.8m leaving a gross profit margin of 14.8 per cent, versus 14.4 per cent a year earlier. The company attributed this to higher gross margins in Industrial Products and "moderate" gains in B2B.
But a $3.5m rise in selling, general and administrative costs, as well as a spike in special charges - $6m related to the move to the European Shared Services Centre - resulted in an operating loss of $5.4m, better than the $6.8m operating loss a year earlier.
After interest repayments and a tax benefit were accounted for, net losses widened by some $100,000 to $6.2m.
The company still has around $100m in cash that can be used to fund further acquisitions, and CEO Leeds said "we're always keeping our eyes open for the right deal". ®
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