Tech Data missed Wall Street earnings expectations by a penny for its second fiscal quarter, blaming the results in part on "softer IT demand and increasingly competitive market conditions" in the U.S., said CEO Bob Dutkowsky.
Tech Data earned $23.7 million, or 45 cents per diluted share, on $6.17 billion in sales for the quarter ended July 31, 2008. The results compare to earnings of $7.2 million, or 13 cents per diluted share, on $5.61 billion in sales for the year-ago quarter.
"Tech Data performed well in the second quarter considering the challenges of the global macroeconomic environment," said Dutkowsky in a statement. "We are taking measured steps to address our margin performance worldwide, while also maintaining certain strategic investments."
Tech Data plans to implement new freight and handling fee policies in the third quarter to help offset higher transportation costs, Dutkowsky said. Dutkowsky did not elaborate on how the fees would be passed on to solution providers. Earlier this month, Ken Lamneck, president of the Americas for Tech Data, indicated that Tech Data would likely change its free freight policy, as other distributors have done this summer.
"We have been evaluating this for quite some time as well. We've had some IT projects under way to make sure. We have as little disruption as possible. We're still going to talk to customers as well before the definitive numbers are worked," Lamneck said on Aug. 4.
It appears as if Clearwater, Fla.-based Tech Data sales fell in the U.S. during the quarter. Net sales in the Americas, which includes North America and Latin America, fell 3.3 percent in the quarter to $2.8 million. The distributor does not publicly release sales numbers for the U.S. alone, but Dutkowsky characterized Canada and Latin America as having a "solid second-quarter performance."
Sales in Europe totaled $3.4 billion, an increase of 23.9 percent, 7.4 percent on a euro basis.
In the current third fiscal quarter, Tech Data expects sales between $6.3 billion and $6.5 billion. The company did not provide earnings guidance for the quarter. Prior to the update from the company, analysts were expecting earnings of 72 cents per share, a penny below the year-ago earnings, on revenue of $6.5 billion for the third fiscal quarter.
Tech Data shares were trading at $35.70 Thursday morning, up 81 cents, or 2 percent.
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