A sharp decline in UK sales saw Computers Unlimited's (CU) top line shrink by 10 per cent in FY13 as profits were more than cut in half.
Annual accounts for Janson Computers Limited – the registered name for the north London-based distributor – reveal that turnover for the year to 30 April fell 10.4 per cent to £119.2m. Pre-tax profit for the year fell 52 per cent to £641,000.
Despite the group sales decline, CU enjoyed solid growth in mainland Europe, where annual revenue jumped from £45.7m in FY12 to £51.9m this time out. But in this country turnover was down 22.9 per cent to £67.3m.
The directors' report for the year reveals that the company intends to boost its standing on the continent with the opening of a new serviced warehouse in the Netherlands next month. This will replace an existing Paris-based facility, which is to close.
CU is split into three divisions: Digital Home, Creative Professional and Apple. The latter appears to have been the star performer in FY13, as the distie claims to have seen iPhone sales rise seven per cent, with iPad sales growing by 65 per cent.
But the report outlines that a change in relationship with another of its major partners was a key contributor to the UK revenue plunge.
"A feature of successful brand building in distribution is that there comes a point at which the brand becomes big enough to launch [its] own local infrastructure and can begin trading directly with the major retailers in the market," explains the report.
"Whilst, for [the brand in question] we maintain sole distribution for the remaining 95 per cent of accounts by quantity, the top dozen or so accounts [which have now gone direct] represent approximately 50 per cent of the revenue. This transition was a key contributor to our reduced revenue."
But the firm claims that it "acted fast" to offset the negative impact of the change, and successfully stripped out £1m of costs.
This year also saw a major shake-up of CU's roster of smaller franchises, and the distributor ended FY13 with 75 brands in its kitbag, compared with 95 last year. Some 15 new vendors were also signed up during the year, meaning more than a third of brands were excised from the line-up last year.
The vendor reshuffle helped the firm to reduce its cost base by seven per cent, which it claims is the first such reduction in four years. The report concludes by characterising the year just gone as one of "consolidation".
The firm sounds a note of optimism for the year ahead, with future success fuelled by "fewer, but more rewarding brands".
"Looking forward, we see the flow of innovative new technologies, products and brands as a great opportunity for the group to prosper," adds the report.
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