Bell aims to cut back its European expenses
Distributor predicts a fall in European sales and labels market 'weaker-than-expected'
Yet another distributor appeared to be feeling the heat last week, as Bell Microproducts announced it will take action to reduce its expense base in Europe and restructure its European operations.
Earlier this month two distributors, Abtec International and East Central, went into administration (CRN, 3 October), and InTechnology posted a restructuring charge of £4m in September (CRN, 26 September).
Bell has predicted a fall in European sales of 13 per cent for its preliminary third-quarter 2005 results.
Don Bell, chief executive of Bell, said in a company statement: “There were several factors affecting sales and profits, including currency effects, decisions to eliminate certain low and marginally profitable product sales, and a weaker-than-expected market in the third quarter in the markets in which we operate in Europe.”
However, the firm said Bell’s UK-based OpenPSL division continued to contribute good results.
“We were disappointed in the performance of our Ideal Hardware division in the UK and our continental European operations.
“We are working to reduce our expense base in the European market as well as to increase our sales and gross profits,” said Bell.
Bell revealed plans to restructure its European operations over the next few quarters. “We expect the programme to result in a total charge to earnings of between $7m and $12m pre tax over the next few quarters,” the distributor stated.
Graeme Watt, president of Bell Microproducts Europe, admitted to CRN that the company has had a challenging Q3 in Europe.
“Market conditions have been tough and we have not been immune to that,” he said.
Asked if the restructure will affect UK operations, such as Ideal Hardware, he added: “The plans for the restructure are being reviewed. We are looking at all areas of the business so I wouldn’t like to single out one specific part. It is a strategic review of the whole business.
“The market is changing and we have to change. A number of distributors have announced similar restructures this year, including Tech Data and Ingram.”
Alistair Edwards, senior analyst at Canalys, said: “It is a pretty familiar story in the distribution space at the moment. Bell’s problem is compounded by the fact that it is in both the volume and the value space.
“Bell has two options: it can either build out the volume side and become much more cost effective in that area; or it go forward with its OpenPSL model and build it into Europe.
“Ideal Hardware has had a fairly flat performance for a while now.”