Systemax To Refocus Around EMEA, Industrial Products
Now that it has exited the North American business-to-business technology market, Systemax will refocus its go-to-market strategy around technology products in Europe, the Middle East and Africa and its industrial product offerings, according to its new CEO, Larry Reinhold.
"It is clear that we have significantly improved Systemax's financial health’ by selling its North American B2B tech group to solution provider giant PCM, including its well-known TigerDirect brand, he told analysts Tuesday following the release of the company's first-quarter 2016 earnings.
He noted that the $1.69 billion deal in December has also made the performance of Systemax’s other units more attractive to investors.
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Reinhold said Systemax’s EMEA business grew its gross profit about 7 percent, driven in part by higher margins.
However, overall EMEA market revenue declined 5.3 percent, which Reinhold attributed to currency exchange rates.
Moving forward, he said, Systemax - No. 17 on CRN's Solution Provider 500 list – will look to expand its momentum in the United Kingdom, where it "significantly lowered," its operating loss – the company did not divulge by how much - over the first quarter of 2015. Reinhold said the company is focused on recruiting sales representatives in the U.K., while planning to open a new office in North London.
Systemax will also turn its focus toward its Industrial Products Group (IPG), which distributes products online and through its catalogs, as it moves past the North American technology business deal, Reinhold said.
He said IPG was the company's most profitable business from January through March, with revenue having risen for the 25th straight quarter, up 7.4 percent over last year.
Overall, Systemax's revenue dropped by double digits, plunging 16 percent from $512.1 million in Q12015 to $429.8 million. It lost $1.1 million from continuing operations, but that was 90 percent better than the $12.1 million it lost in the same quarter last year.
In the fourth quarter of 2015, Systemax announced it would exit all its operations in its NATG, selling most of its business-to-business operations to PCM while winding down all its remaining NATG operations and fully exiting the business.
Since 2012, Systemax had been scaling back its retail business – previously a large part of its NATG – from its peak of 42 stores in 2011 to just three in 2015, which were being used only to sell the remaining inventory.
Reinhold, who in March replaced Richard Leeds as CEO, said Systemax finished shutting down all NATG operations in the first quarter, costing the company $18 million. The company will spend a final $5 million to $7 million in the current quarter to pay an outstanding lease on NATG’s former headquarters in Miami.