Systemax files $2.2m losses as US shoppers stay home
Bullish outing in Europe can't save reseller giant's Q2 profit margins
Systemax was hit by Q2 losses as continued strong trading in its business-to-business operation in Europe was more than offset by US shoppers' reluctance to part with cash, the reseller giant confirmed late last night.
Operating losses for the period ended 30 June were $2.2m compared to a profit of $15.6m a year earlier, "primarily a result of the performance of the company's North America technology consumer business", said the NYSE listed firm.
Special charges incurred were roughly $2.2m in pre-tax terms relating to the closure and relocation of a smaller distie centre and call centre for the Industrial Products unit and legal fee for a previous probe into director affairs.
Sales declined 2.6 per cent to $849.5m due to a currency headwind and again it was a tale of two operating segments: turnover in the retail unit collapsed 15.3 per cent to $329.9m but grew 7.7 per cent in the B2B channel to $519.6m.
Richard Leeds, chairman and CEO at Systemax, claimed its reseller operations in Europe "continue to significantly outperform the region" but the situation was less than rosy Stateside.
"The industry is facing a number of cyclical challenges, including soft demand and shifting consumer habits," said Leeds. "That said, the operating loss we recorded in the business was not acceptable and we are taking actions to address the factors within our control."
These include changing the website, "realigning" marketing programmes, reviewing the product mix, more promos and upgrading services.
"On the logistics front, we are moving to improve our inventory replenishment process and increase inventory turns," said Leeds.
He pointed to the "healthy balance sheet" and $146m of cash in hand, "both of which provide us with significant flexibility to execute on our growth strategies".
As previously reported by The Channel, Systemax wants to become the most potent force in the European channel within five years and plans to get there by overhauling the organisation and making acquisitions.
A quarter like this Q2 certainly gives management the incentive to speed up those transformation plans at a group level. ®