Julien Eichinger - stock.adobe.c

Tech Data CEO looking for the higher value

The distributor is continuing to make its move towards higher value business

Tech Data's CEO has indicated that its strategy to remain at the forefront of the channel has been gathering momentum in the firm's last fiscal year.

The distributor released full year numbers overnight for the period ended 31 January indicating a 11% increase in net sales, with a 10% improvement in Europe to $20bn. Gross profit also climbed by 7% to hit $2.3bn although operating income across Europe was flat.

Speaking to analysts about the numbers Tech Data's CEO Rich Hume said that it was taking steps to make sure it could continue to reach out to a widening channel base. 

He became CEO of the channel player in June last year and started to introduce a strategy that was designed to ensure that the business drove forward.

"Fiscal ‘19 was a year of strategic progress. As you may recall, our four-pillar strategy includes, investing in next-generation technologies, strengthening our end-to-end portfolio, transforming Tech Data digitally and optimizing our global footprint. We summarize our strategy as moving to higher value," he said.

"Tech Data’s position at the center of the IT channel positions us to serve both traditional and born in the cloud vendors and global network of conventional customers, as well as new customers such as ISVs and MSPs,' he added.

Hume said that the demand for IT was expected to grow and it was forecasting that it would grow organically at the market rate but warned that its moves to a higher value approach would have some impact.

"We expect this growth to be offset in part by targeted portfolio optimization actions, which will allow us to free-up related working capital and enable us to accelerate our move to higher value," he added "Our Q4 result are evidence that these actions are already underway, as we execute our portfolio optimization strategy throughout fiscal ‘20, we expect revenue growth to moderate, but our mix of higher value businesses to improve setting us up to drive better returns for our shareholders."

Hume was clear that the firm had to keep the transition away from commoditised business moving through this year.

"Long-term, I think that you can look at our history and expect Tech Data to have the same type of performance relative to the market that you have seen in the past. There will be a period here where we work the portfolio, and again, we will offset some of that growth, but we are very confident in the operating plan that we have got for fiscal ‘20 and we are feeling really good about our future," he said.

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