Action Computer Supplies has turned its back on another merger and embraced a web strategy in a bid to reverse its string of poor financial results.
The mail order reseller posted turnover of £137.6m for the six months ended 29 February down from £140.9m for the same period last year. It said that it will change its business model to embrace the internet and return Action to its former profitability. Pre-tax profit for the period was £400,000, down from £2.7m last year.
However, Action declared that while profit was down, the reseller is showing signs of the expected recovery. It attributed the decline in turnover to concerns over the millennium bug.
Action said it has made increasing use of the web, which had resulted in the company becoming stronger and more efficient. Online sales were up 38 per cent on the second half of last year and are expected to total about £66m this year.Action said it had also increased its product range by 40 per cent, using the Internet to link to suppliers.
The reseller said it will slash the price of more than 18,000 products and services available through its Action.com site from this week, because it has begun to reap the cost benefits of its dot com channel.
Action claimed this will make its prices up to 30 per cent cheaper than those offered by conventional resellers. The company has also appointed Durlacher to act as its financial adviser, sponsor and stockbroker.
George Laplante, managing director at Action, said the company had turned its back on last year and was well positioned to become a web centric company. He ruled out the possibility of another merger following its failed takeover by US giant Insight, saying Action will use the web to expand. "We're not looking at another deal. We've had enough turmoil," he said.
Henry Lewis, chairman of Action, said: "We expect sales growth to return now that millennium bug concerns are over and we reap the benefits of our web, call centre and IT infrastructure investments.
"Although competitive pressures are always a feature of our landscape, we believe that our Internet cost advantages and today's announced price cuts give us price leadership in all our key markets and will accelerate our sales growth."
The article was first published in 12 April issue of Computer Reseller News
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