Strong dollar hammers Tech Data’s top line

The weakening dollar took its toll on Tech Data during Q4

Computer 2000 parent Tech Data has warned that sales for its current quarter may slump by as much as a fifth.

The weakening dollar took its toll on the distributor’s top line in its fourth quarter to 31 January. Although sales slipped by about five per cent year-on-year in local currencies, in dollar terms the drop was 11.9 per cent as revenues hit $6.5bn (£4.6bn).

And the broadliner readied the market for a much steeper drop in sales for its current fiscal Q1.

“In light of the current macro-economic environment and the related decline in IT spending, combined with the strength of the US dollar against certain foreign currencies, first-quarter net sales for the period ending April 30 are anticipated to be down by as much as 20 per cent year-over-year,” it said in a statement.

Overall, Q4 went smoothly for the NASDAQ-listed firm as net profits beat Wall Street expectations by rising 17 per cent to $58.6m.

Europe enjoyed a solid quarter as net income from the region nearly doubled to $63.6m. European sales fell by 10.3 per cent in dollars but were flat on a Euro basis.

Chief executive Robert Dutkowsky said Tech Data’s recent cost reduction actions and improvement of its inventory, pricing and freight management disciplines were validated by its Q4 performance.

“Despite the overall net sales decline, we gained share in selected markets and we improved our gross margin and operating income performance both in the Americas and Europe,” he said.

For the year as a whole, Tech Data banked a net profit of $123.6m on revenues that grew 2.8 per cent to $24.1bn.