Systemax Inc. has officially exited the North American consumer market, where it generated $1.4 billion in online consumer sales in 2015, according to Top500Guide.com. Going forward, the company will focus on selling online to businesses in Europe, the Middle East and Asia, it says.
Systemax, which owns and operates Global Industrial and other branded organizations that sell information technology and industrial products, shuttered its final three TigerDirect retail stores in January, and stopped operating its TigerDirect branded e-commerce sites Feb. 15, a spokesman says. These were the U.S.-based TigerDirect.com and related e-commerce sites that sell to consumers in Canada and Puerto Rico, as well as the B2B e-commerce sites biz.TigerDirect.com, GlobalComputer.com andGlobalGovEd.com, which sell computers and other technology products to businesses, schools and government agencies, a spokesman says. These businesses were all included within the company’s North American Technology Group.
PCM Inc. purchased the TigerDirect businesses for $14 million in cash from Systemax in November 2015, and now operates the e-commerce sites, and now operates the e-commerce sites along with other PCM online businesses.
At the Systemax North American Technology unit, “we fully exited business operations as we sold all remaining inventory, closed all remaining retail stores and the warehouse,” Larry Reinhold, president and CEO, told investors in a Q1 conference call late Monday. “We expect remaining wind-down activities will be substantially completed by the end of the second quarter.”
With TigerDirect.com, Systemax was the 32nd largest North American online retailer according to the Internet Retailer 2016 Top 500 Guide, which ranks companies on their annual web sales. Several years ago, Systemax acquired the assets of multichannel retail chains CompUSA and Circuit City, folding them into its TigerDirect operations.
Systemax’s closing of its TigerDirect retail and online operations means the distributor has focused its entire operations on its Industrial Products Group and its EMEA Technology Group.
The company’s total sales, which are now all business-to-business, decreased 16.1% year-over-year to $429.8 million for the first quarter, down from $512.1 million. Systemax doesn’t break out online and offline sales, which include sales processed through field sales reps and customer contact centers. But, Systemax is No. 41 in the B2B E-Commerce 300, which ranks companies on the annual B2B web sales.
The Industrial Products Group, operating under the Global Industrial brand, increased first quarter revenue to $170.6 million, up 7.4% from $158.9 million this time last year, a spokesman says. Global Industrial sells more than 1 million industrial, material handling, office furniture and other business products through GlobalIndustrial.com, direct mail, field sales reps and a customer contact center. Reinhold said sales in such core categories as product storage and material handling grew over the quarter, but were offset by softness in office supplies and heating.
The EMEA Technology Group, which includes the Misco and inmac wstore brands, decreased first quarter revenue to $258.2 million, down 5.3% from $272.6 million last year, a spokesman says. EMEA Technology group sells information technology products through e-commerce sites and sales reps to businesses in Europe. The company operates in Austria, Belgium, France, Germany, Ireland, Italy, Netherlands, Spain, Sweden, Switzerland and the United Kingdom.
“France once again was a strong performer, with local currency revenues up double-digits for the ninth consecutive quarter, and our Netherlands solution business reported more than 20% revenue growth,” Reinhold said. “We also had solid sales growth in a number of our smaller markets.” Systemax is planning to open a new office in North London, as well as launch a new training program for home-based European sales reps, although Reinhold declined to specify when such new programs would launch.
For the fiscal first quarter ended March 31, Systemax also reported:
A net loss of $17.3 million, compared with a net loss of $28.6 million. “For the quarter, the discontinued North American Tech business incurred losses of $18.0 million, primarily related to the closing of the warehouse and two retail stores that were in operation during part of January,” Reinhold said. “We anticipate recording additional losses on discontinued operations of between $5 million and $7 million during the second quarter. The largest component of these anticipated losses will relate to accruals related to the Miami headquarters building.”
PCM also operates technology e-commerce sites PCM.com, MacMall.com and PCM-G. In addition, PCM builds e-commerce portals for business clients, letting them research and purchase products from PCM on sites customized to their product needs. The customized sites also let PCM’s customers control employee access to the sites, track transactions and set up automated purchasing.
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