Profitable business evaporates at Systemax... make that all business growth
Shuttering US retail stores blamed, but UK get hair dryer treatment from CEO too
The year seems to be going from bad to worse for ailing tech supplier Systemax with losses widening and revenues narrowing.
In calendar Q3, the reseller reported sales of $699.3m, down 15.3 per cent from $825.4m in the same period a year ago, the primary cause of this was the North America Tech Products unit.
Stateside, the division’s turnover slumped 31.3 per cent to $276.1m, following the closure of 31 retail stores.
Chairman and CEO Richard Leeds said: “While we continue to see substantial disruption to business, we are making progress and we have reduced our cost structure significantly.
“However, the business has not yet reached an acceptable performance level and we are exploring strategic alternatives as we move forward with our restructuring effort,” he added.
This sound a bit like a euphemism for trying to find a buyer, not that there’ll be too many of them - certainly in the trade - given the financial state of Systemax in America.
The Tech Products unit made an operating loss of $12.9m in the quarter, versus an operating loss of $1.8m in Q3 2014.
One shining light across the pond, the Industrial Product group, which sells kit including air-con units, office furniture and heavy duty industrial gear and supplies, grew sales 26.3 per cent to $180.1m, but profits dipped to $10.3m from $10.6m.
Closer to home, the EMEA Tech Product subsidiary reported a decline of 13.4 per cent to $241.8m - flat in constant currency - and operating losses of $1.8m, albeit better than the $7.9m operating loss a year ago when restructuring costs hit.
All markets in the region “showed improvements", all that is "except the UK", said CEO Leeds.
Leeds said top brass in Europe have “undertaken an extensive review of our operations and implemented a number of steps to improve our ability to serve the market”. He didn’t elaborate.
It will take time for Taylor to put right any mistakes made by the previous hierarchy in the locale.
At group level, operating losses - once intra-company trading was accounted for - grew to $8.2m from an operating loss of $2.7m a year ago. After tax and interest payments, net loss was $10.3m compared to a net loss of $2.8m last year. ®