A sorry Brexcuse! Systemax blames Brexit for car crash Q3 results
But weren't sales sliding before the EU referendum? Yes, they were
Sickly supplier Systemax has blamed Brexit for its latest car crash financials as losses in the UK mounted in the wake of the EU referendum.
The once mighty reseller reported falling year-on-year sales at its European Technology Group (ETG) for Q3 ended September, down 6.3 per cent to $226.5m. Trading output across the region was mixed, the firm said.
CEO Larry Reinhold said in prepared remarks the French subsidiary posted its eleventh straight quarter of sales growth, and ops in the Netherlands its third consecutive quarter but the business in Britain let the side down.
“In the UK, our operations remained challenged and the post-Brexit market is tough. While the top line decline narrowed in the quarter, operating losses increased,” said the chief exec.
Some vendors have used Brexit to explain weaker than expected results, but on the whole most have claimed that aside from the weeks before and immediately after the referendum, normal customer spending has resumed.
Reinhold said the UK arm sought to win bigger orders from public sector and large enterprise account to “gain traction with the customer base” but this resulted in “somewhat lower margins”.
Gross profit declined 13.2 per cent year-on-year to $26.4m due to the change in sales mix and "aggressive pricing" in the UK, and ETG reported operating losses of $4.1m compared to a $1.1m loss from operations a year ago.
Twenty sales heads were added in the quarter to the UK team, and the country operation's sole focus will be “solutions and services”, the continued rollout of which is an ongoing effort towards “returning the business to profitability”.
Systemax has struggled to find its place in the world over the past four years as the margin in box-shifting continued to deplete. As sales continued to shrink, it shuttered PC assembly and retail outlets in the US, the North America reseller wing was sold to PCM, ultimately costing Systemax $55m to get shot of it, and most recently the German reseller division was sold to Cancom.
The company has unsuccessfully made a belated move into managed services, buying up SCC’s Dutch arm, and has centralised back office function to Budapest to cut costs but with questionable customer service outcomes.
The only part of Systemax that has continued to file top-line expansion is not related to tech at all; the Industrial Products unit sells office equipment, air conditioning, etc. This area grew 4.1 per cent in Q3 to $187.4m, and reported operating income of $8.5m, down from $10.4m. ®