Systemax blames vendors as profits fall

Giant reseller admits competitive landscape remains challenging as Q3 margins take a tumble

Profit squeeze: Systemax said margins remain under pressure

Systemax’s third-quarter sales were bolstered by a strong b2b performance but the VAR hit out at its vendor partners as margins fell back.

The New York-listed goliath, which owns Misco and recently acquired Anglo-French online reseller WStore, saw revenues rise 14 per cent to $862.7m year on year in the three months to 30 September.

Without the contribution of Wstore, revenues were up 11 per cent. B2B sales grew 24 per cent to $435.2m, while consumer revenues rose a more modest six per cent to $427.5m.

The WStore acquisition led Systemax to take $2.9m of one-off charges during the quarter and operating profit fell from $19.4m to $12m year on year.

Gross margin fell from 15 to 13.5 per cent, which chief executive Richard Leeds put down to the effect of discounted freight and $1.4m in start-up costs for its new Georgia facility. He also said competitive consumer pricing was “not offset by sufficient vendor funding”.

He added: “During the third quarter, we experienced strong top-line results with consolidated revenue up 14 per cent from the prior year, benefiting once again from solid performances in our business-to-business technology and industrial operations....

“However, the consumer environment and competitive landscape is still challenging and both gross and operating margins remain under pressure.”

Systemax chief executive Gilbert Fiorentino, said: “In Europe, we are poised to capitalise on the WStore acquisition as we complete its integration by the end of the year in France.”