Tech Data Corp., a distributor of I.T. products and services to thousands of resellers, reported strong sales in its Americas and Asia-Pacific regions for the fiscal second quarter ended July 31 but noted that weakness in its European markets pulled down its global growth rate. The company, which does about half of its sales electronically, said Q2 net sales increased 2.3% year over year to $9.09 billion.
Sales in its Americas regions increased 7% to $4.32 billion, driven in large part by demand for computer hardware and software, networking servers, security products, plus “hyper-converged technology” applications that combine data storage, computing and networking into a single system to reduce data center complexity and increase scalability, the company said.
Tech Data doesn’t break out its ecommerce sales, but it says it does about half of its sales electronically through ecommerce and EDI, and that it has annualized “cloud billings” valued at $1.5 billion. For the fiscal year ended Jan. 31, 2019, Tech Data’s total net sales increased 10.8% year over year to $37.24 billion.
CEO Rich Hume said on a conference call with investment analysts last week that Tech Data is moving ahead with a growth strategy that includes “transforming Tech Data digitally” and investing in next-generation technologies, according to a transcript of the call from Seeking Alpha. He added that the company was on course to reach its goal of annual cost savings of $70 million to $80 million by the end of the current fiscal year next January; he noted that Tech Data will reinvest half of that savings in its digital transformation efforts and other growth strategies.
Although sales declined in Europe, partly because of currency rates, Europe still edged out the Americas in Q2 as Tech Data’s largest market in net sales, at $4.44 billion compared with $4.32 billion in the Americas. In its Asia-Pacific markets, Tech Data’s Q2 sales increased 14% to $335.9 million.
For the fiscal second quarter ended July 31, Tech Data reported:
- Gross profit increased 7% to $561.7 million, resulting in a gross profit margin of 6.18%, up from 5.93%;
- Net income increased 4% to $79.3 million.
For the six months ended July 31, it reported:
- Net sales increased by less than 1% to $17.50 billion;
- Gross profit increased 2% to $1.07 billion, resulting in a gross profit margin of 6.12%, up from 6.02%;
- Net income increased 23% to $134.7 million.
Sign up for a complimentary subscription to B2BecNews, published four times per week, covering technology and business trends in the growing B2B ecommerce industry. B2BecNews is a publication of DigitalCommerce360.com, whose titles also include Internet Retailer and Internet Health Management. Contact B2BecNews editor Paul Demery at [email protected] and follow him on Twitter @pdemery.Favorite