Systemax posts first $1bn quarter

WStore and Misco owner boosts sales but profitability dries up

Strong B2B sales helped retail behemoth Systemax post its first billion-dollar quarter during 2010's last three months.

The New York State-based firm, which owns UK retailers WStore and Misco, saw Q4 2010 sales grow seven per cent annually to just over $1bn (£622m). Like-for-like B2B revenue grew 15 per cent year on year during the quarter. But consumer sales slipped one per cent.

Operating margins also took a hit during Q4, falling to two per cent from 3.3 per cent a year ago. Consequently, Systemax's operational profit during the quarter declined by a third to $20.4m, despite the turnover increase.

For the full year, the reseller's revenue rose 13 per cent to $3.59bn. Some of the growth (four per cent) was contributed by WStore, which Systemax acquired in September 2009. Operating profit for the whole of 2010 dropped 6.7 per cent to $68.7m. The integration of WStore – which is now complete – cost the US firm around $4.3m during the year.

Systemax chief executive Richard Leeds claimed he was pleased with 2010's revenue growth, singling out B2B operations for special praise. He accepted that "consumer sales remain challenged", but predicted they will "improve as the economy continues to recover and new products are introduced by our vendors".

"We are not content with our bottom line performance and it remains a key focus area for our management team," he added."We are committed to taking steps to improve margins by driving efficiencies across our operations. The ramp-up of our new distribution centre in Georgia, as well as the completion of the WStore integration, should both contribute in that regard in 2011."