Misco sales slump sees Systemax losses widen
UK business the only unit in EMEA not to see bottom-line improvement
The UK has let Systemax down in Q2, with slumping sales at its Misco unit contributing to widening losses at the firm.
Systemax made a $28.4m (£18.17m) loss in the second quarter, which ended 30 June, compared with a $6.2m loss the year before. Sales in Q2 fell 11 per cent to $740m over the same period.
In its EMEA Technology Group, sales slumped 8.8 per cent annually to $252.2m, but on a constant-currency basis and excluding the impact of Misco's 2014 acquisition of SCC's Dutch arm, sales rose 0.6 per cent annually. The UK was singled out as a poor performer.
"[In EMEA Technology Group], operating losses narrowed in the quarter on a sequential and year-over-year basis, as we benefited from double-digit growth in France and bottom-line improvement in all other markets, except the UK," said Systemax's chief financial officer Larry Reinhold.
Systemax's chief executive Richard Leeds said new EMEA boss Simon Taylor – who joined from Insight and replaced Pim Dale earlier this year – is charged with turning around the UK.
"[Taylor] brings a wealth of industry knowledge and significant operating experience in the EMEA region," said Leeds. "I will be working closely with Simon in driving the growth strategy and operational initiatives for our EMEA business and one of his primary focus areas will be on improving our UK operations."
It is not just the UK and EMEA acting as a headache for Systemax, as its North American business also saw sales slump 25.7 per cent to $305.1m in Q2. On a constant-currency basis, sales fell 11.5 per cent.
The only growth in Q2 came from its Industrial Products group after the unit's sales jumped 27.3 per cent annually to $180.9m.
Systemax recently announced plans to exit the retail space in order to focus on its B2B operations.
Leeds said he is confident the plan will pay off.
"We have successfully completed our retail store liquidation and the restructuring of our distribution network, which resulted in a substantial one-time charge in the quarter," Leeds said. "As anticipated, sales declined due to the exit of retail. The disruption of this major restructuring and information technology system changes also impacted the overall business; however, we believe our focus on the B2B customer remains the right direction for this business.
"As we enter the second half of the year we are focused on improving the performance of all three of our business units. We continue to broaden our solutions and services offering, bringing enhanced value to our customers. We believe these efforts will allow us to strengthen our competitive position and deepen our customer relationships."