Consumer spending dip hurts Systemax

Business spending held up but a drop in consumer interest hit Systemax in its second quarter

Business to business sales might have grown but the decision by consumers to keep their money in their wallets helped lead to a $2m loss at Systemax.

The resellers numbers for its second fiscal quarter make uncomfortable reading for anyone looking to consumers to help lead the recovery charge with its channel sales on that side of the business dropping by 15.3%.

Business to business channel sales grew by 7.7% but overall consolidated sales dropped by 2% for the three months ended 30 June to $849.5m compared to $872.2m in the same period a year earlier.

Richard Leeds, chairman and CEO of Systemax, said that it had been hurt by the decision by US consumers to decrease spending: "Results reflect a continuation of the trends we saw in the first quarter, with our B2B operations delivering outstanding performance that was more than offset by disappointing results from our North American technology consumer business."

He had good words to say about the UK and Europe, which continues to outperform, "led by the UK, France and the Netherlands, while North America delivered modest growth in a soft market environment".

"Our North American consumer business had a low double digit reduction in top line sales as the consumer electronics industry recorded double digit declines across key product categories. The industry is facing a number of cyclical challenges, including soft demand and shifting consumer habits," he added.

But reflecting a decision taken by many others in the industry Leeds said that were it could control its costs it would and steps would be taken to improve its operations.

"On the logistics front, we are moving to improve our inventory replenishment process and increase inventory turns," he said.

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