Misco parent Systemax is shuttering the majority of its retail empire as it looks to devote its attentions to its B2B operations.
The NYSE-listed firm has announced it is closing 31 of its 34 US retail stores, a move that will cost it between $50m (£33.2m) and $55m in one-time severance costs.
In a Q4 and full-year earnings announcement, Systemax also revealed it has received an initial restitution of $120,000 in gold bullion seized from Gilbert Fiorentino, who was recently jailed alongside his brother, Carl, for accepting kickbacks while executives at the firm.
For its full year, Systemax saw net losses narrow slightly from $43.8m to $37.5m. Although total sales rose by 2.7 per cent to $3.4bn, the retail business was a drag on the results, with consumer channel sales slumping 11.7 per cent to $0.9bn.
"Today, we're announcing the strategic decision to accelerate our B2B and public sector customer focus by substantially exiting our bricks-and-mortar retail stores," Richard Leeds said on a conference call last night.
"This decision is driven as much by the excitement we have for our B2B operations, as well as the reflection on the realities of the consumer and retail businesses, over the past few years."
Systemax expects to close 31 stores by the end of Q2 but will continue to operate three retail locations – one at its technology products distribution centre, one in Puerto Rico and one next door to its Miami HQ. It is also closing one of its two technology product distribution centres.
The restructuring is designed to save it between $18m and $22m annually.
"These are difficult decisions to make. But the dynamics of the consumer market make them necessary, and we're moving forward with them at an extensive review and planning process," Leeds said on the call, a transcript of which can be found here.
"I would like to personally thank all our employees for their efforts and specifically those directly impacted by these difficult decisions."
Systemax may be pinning its hopes on B2B but the performance of its UK B2B arm, where it operates under the Misco banner, remains disappointing, Leeds said. Operating losses in Europe expanded in Q4, primarily related to volume and margin decline in the UK.
Systemax also used the call to provide a brief update on its efforts to claw back some of the money owed to it by the Fiorentino brothers, who were sentenced to 60 and 80 months in prison last week.
"We have received some initial restitution in the form of gold bullion, worth approximately $120,000, that was seized by the government from Gilbert," said Systemax chief financial officer Lawrence Reinhold.
"There will be a restitution hearing in early April that will start the process to determine the amount of final restitution that the Fiorentinos will owe Systemax."
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