CDW Corp. reported growth in nearly all business segments in the 2017 fourth quarter and fiscal year.
A highlight was online as well as offline sales to small businesses–a point of emphasis since January 2017–which grew 7.9% in Q4, to $314.8 million from $291.8 million. Total small business sales, which CDW began reporting as an individual business segment in 2017, grew 9.3% for the fiscal year, to $1.246 billion from $1.140 billion, the company reported last week.
“Our focus on small business and the creation of a standalone segment paid off in 2017,” Christine Leahy, chief revenue officer, told analysts on CDW’s year-end earnings call on Feb. 7. “Small business growth was driven by double-digit increases in client devices and high single-digit increases in video (equipment),” she said, according to a transcript of the call from Seeking Alpha.
The increased sales to small businesses coincided with a program launched a year ago to offer them more online access to products and services. Because its smaller clients are accustomed to using the internet to get information on CDW’s products and services—and to complete purchases—the company launched an initiative focusing on e-commerce for small businesses, CEO Thomas Richards said on the company’s year-end earnings call in February 2017. The company sells online to businesses and consumers at CDW.com.
Under the small business program CDW dedicated an internal e-commerce team to further develop online resources available to small-business customers, a customer segment it defines as companies with 20 to 250 employees. Among those customers, compared with larger ones, “there is a much greater utilization of online digital resources both on the consultative end and on the purchasing end,” Richards said on the conference call a year ago.
CDW’s small-business customers can browse and buy among computer hardware and software products; subscribe to cloud-based computing and data-storage services CDW makes available from companies like Microsoft Corp., IBM Corp. and Alphabet Inc.’s Google; and view information and arrange for consultations with CDW technology experts about such matters as deploying cloud technology.
E-commerce is taking on new responsibilities at CDW and the plan is to merge its strengths with those of it sales reps to forge a formidable sales team.
“We are now moving to make e-commerce a growth engine,” John Seebeck, vice president and general manager of e-commerce, told attendees at the B2BecNews Executive Seminar in April 2017 in Chicago. The seminar, which also featured speakers from several other manufacturers and distributors, was the first in a series of B2BecWorld executive seminars produced by B2BecNews publisher Vertical Web Media.
CDW doesn’t break out online sales, but the company is No. 28 in the 2018 B2B E-Commerce 300 with estimated 2017 online sales of $6 billion.
For the fourth quarter ended Dec. 31, 2017, CDW reported:
- Net sales of $3.839 billion, up 9.9% from $3.492 billion in the prior year quarter;
- Gross profit of $614.4 million, up 6.3% from $577.9 million;
- Gross profit margin was 16.0%, compared with 16.5%. Profit margin decline was driven mainly by increased hardware sales and competitive pricing, the company says.
- Net income of $195.2 million, up 89.1% from $103.2 million in the fourth quarter of fiscal 2016.
For the fiscal year ended Dec. 31, 2017, CDW reported:
- Net sales of $15.192 billion, up by 8.7% from $13.982 billion in the same period last year;
- Gross profit of $2.450 billion, up 5.3% from $2.327 billion;
- Gross profit margin of 16.1%, compared with 16.6%, also driven downward by increased hardware sales and price competition, the company says.
- Net income of $523.0 million, up by 23.2% from $424.4 million in fiscal 2016.
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