Distribution giant Tech Data has said it is not looking to cut reseller numbers or dramatically change its business model following its announcement that it will restructure its EMEA operations.
The firm, parent company of Computer 2000 (C2000), cited the region's challenging market conditions as the reason for its recent poor first-quarter financial results.
The firm reported turnover down by 9.6 per cent to $5.1bn, compared with the previous quarter, and sales in EMEA decreased by 16.9 per cent compared with Q4 last year. Net sales in EMEA totalled $2.8bn, or 55 per cent of worldwide sales. Profit for Q1 totalled $33.5m, compared with $34.7m in the equivalent quarter last year.
However, Steve Lockie, managing director of C2000, told CRN that the restructuring shouldn't cause concern for its channel partners. "Resellers have been feeling the squeeze too, but they won't be seeing any change from us. We aren't looking to cut down our number of resellers, just to develop an effective model to address EMEA."
The restructuring is expected to cost the distributor between $40m and $50m over the following five to six financial quarters.
Savings as a result, including other projects, are hoped to be between $55m and $65m annually.
"Unit shipments are high, but because revenues are dropping we have to sell more just to keep up. We will use IT to develop cost savings, as well as a consolidation of facilities and functions," added Lockie.
However, Clive Longbottom, service director at Quocirca, said: "When a distributor restructures, cost-cutting will usually ensue, and that could be dangerous for the channel.
"Tech Data should be looking at how it can add more value. Hardware just isn't a high margin maker any more."
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