CRN Top VARs 2014 - US giants flatlining in UK
A sneak peek into the findings of our annual research into the UK's top 100 resellers shows Insight and Misco had a tough year
Two of the giants of the US channel saw sales at their UK operations roll gently backwards last year.
Misco and Insight endured declines in both revenue and profitability in the UK in 2013, recently filed annual accounts reveal.
Misco, which is owned by US resale titan Systemax, saw UK turnover slip back three per cent to £299.9m during the 12 months to 28 December. Operating profit plummeted 87.3 per cent to £1.55m, compared with more than £12m in the prior year.
Shareholders' funds decreased by almost £7m to £45.6m over the course of FY13, while assets as a percentage of liabilities also declined, from 193.9 to 170.8 per cent. Meanwhile the firm's yearly staff costs shot up from £22.1m to £25m as its employee ranks swelled from 596 to 611.
The directors' report for the year said: "The increase in headcount... primarily in the sales team was anticipated to deliver increased sales in 2013 but, due to the competitive market, this has not yet crystallised."
The firm recently parted ways with its UK and Ireland executive vice president Gary Withington and UK sales director Richard Logan. In a conference call to accompany Systemax's third-quarter results, chief executive Richard Leeds claimed the company had made local management changes in response to a disappointing performance.
"We have seen weakness across most of our European markets and particularly in the UK, where we've taken a number of actions to improve our performance, including the replacement of certain of the senior management team," he said.
Sources claim that long-time Misco sales bigwig Sue Keywood has stepped into Withington's post, and her LinkedIn profile appears to confirm as much, citing her current role as UK and Ireland general manager. Channel chatter also suggests Craig Garrod has effectively assumed Logan's former responsibilities; his LinkedIn profile claims he took on a position as executive commercial sales director last month.
Insightful results
Rival Insight, meanwhile, saw its UK revenues drop 1.2 per cent to £399.2m. Despite the sales decline its cost of sales was up by £2.4m to £346.3m. The company also posted a £2.9m pre-tax loss, compared with a £5m profit in 2012.
The directors' report for the year claimed a competitive marketplace, coupled with investments in the future success of the business, put a dent in the top and bottom lines last year.
"The company saw continuous investment during the period across its cost base to support future trading growth," says the report. "This investment, together with the trading decline, led to a decrease in the operating result, with a reported [operating] loss of £3m."
Throughout last year Insight's quarterly results were often accompanied by senior management allusions to the negative impact on its profitability caused by changes to Microsoft's channel incentive scheme. But Wolfgang Ebermann, who joined as EMEA vice president at the start of the year, proclaimed earlier in 2014 that "we are over it".
Although both endured slight declines last year, Insight and Misco remain among the biggest firms in the UK channel. To find out exactly where both place in our annual rundown of the country's 100 biggest resellers by revenue, read CRN Top VARs 2014, which is published on Monday.
Look out for more snippets from our research for the rest of this week. Get in touch to share your thoughts with us via phone, email, online comment, or on Twitter, using the hashtag #CRNTopVARs.