Systemax Inc. finished off a challenging first half with net sales gains in May and June, helping to offset earlier quarterly declines that it has attributed to the market disruption caused by the COVID-19 pandemic.
The company, which relies heavily on ecommerce and operates GlobalIndustrial.com as its flagship website, said yesterday that net sales fell by 2.6% year over year for the quarter ended June 30. Sales gains of 4.3% and 6.4% in May and June, respectively, partially offset the decline in April and put Systemax back on a positive revenue track to close out a challenging first half.
Barry Litwin, CEO, Systemax Inc.
Barry Litwin, CEO, attributed the improved revenue performance to growth in sales of personal protective equipment, or PPE, an expanding line of pandemic-related products, and increased sales of general business products as its client businesses began to reopen.
Litwin also said that the company’s emphasis on ecommerce is helping Systemax to better compete and stand out among its competition with digital services, marketing and operating efficiency. He added that Systemax is increasing its investment in digital technology and operations.
Investing more in digital and marketing
“We believe our ecommerce-centric foundation provides a competitive advantage that differentiates us from retail-focused distributors,” Litiwin said on a conference call with investment analysts yesterday, according to a transcript from Seeking Alpha. “We’re making further investments in both digital and marketing capabilities, including new resources and talent, which will further accelerate our digital capabilities and drive sales efficiency over time.”
He added, “We remain focused on our multi-year strategy to accelerate our customer experience, generate operating leverage from current operations and investments, and champion a customer-focused culture across our entire organization. The economic environment remains challenging, but we are seeing a number of opportunities and will continue to make strategic investments to strengthen our position for the future.”
In recent months, Systemax has also developed a “Restore, Return, Rebound” program designed to help customers acquire and deploy pandemic-related supplies and systems. To help shore up inventory of PPE and other product categories amid disrupted supply chains, Systemax has also expanded its inventory of private-label products, a move that also boosted gross profit margins, Litwin said.
The company, which sells products ranging from forklift equipment to power tools, offers more than 1 million brand-name and private-label products through several B2B ecommerce sites, including IndustrialSupplies.com, Nexelwire.com, its flagship brand GlobalIndustrial.com and the Canada-based GlobalIndustrial.ca.
Systemax doesn’t break out ecommerce figures but notes that its ecommerce plays an important role for most of its sales, including customer orders placed with the help of sales reps. Systemax describes itself as “a provider of industrial products in North America going to market through a system of branded ecommerce websites and relationship marketers.”
For the quarter ended June 30, Systemax reported:
- Net sales fell by 2.6% year over year to $242.1 million;
- Gross profit declined slightly by 1.4% to $84.8 million, but nontheless resulted in a gross profit margin of 35.0%, up from 34.6%;
- Net income increased 12.3% year over year to $16.4 million.
For the six months ended June 30, Systemax reported:
- Net sales declined by 2.4% to $469.4 million;
- Net income inched up by 1.2% to $24.6 million.
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