Northamber notes Q3 sales tightness, April demand sluggish


Northamber notes Q3 sales tightness, April demand sluggish

Microscope contributor

Northamber cited challenging market conditions and its decision not to chase "empty revenues" as reasons for the continued sales slide in its fiscal third quarter.

The Surrey-based distributor, which today posted an interim statement for the trading period ended 31 March, also warned that demand levels were again moving in the wrong direction but was unable to determine the impact on yearly sales.

"The lack of strength in the market is evidenced by the unwillingness of vendors to increase prices which would normally be driven by weaker sterling. Without empty revenue having been pursued, the resulting slow decline in turnover continued," it said.

However, gross margins did improve, operating expenses fell 16.8% or £1.3m due to the cost cutting action taken by the firm and cash in the bank grew by £1.5m on 31 December levels to £14.6m.

"As ever, working capital management is a core element of our management processes. Despite adverse conditions and continuing our strategy of always remaining within-terms or seeking early settlement discounts, we maintained our cash surplus," said the firm.

The interest Northamber makes on its debt-free cash balance remains "sharply reduced" on pre-recession levels. The marginal levels of interest rates available saw Q3 earnings drop to less than one third of the investment income in the year ago period.

"When compared with the 0.3% of turnover loss last year for the same period, the result for the first 9 months of the current year slightly exceeded break-even, before tax and was a creditable performance," the company added.

Northamber chairman David Phillips has often been desperately realistic about the relatively recent business landscape in the UK channel. Today he said that PC and other IT sales in the UK during April "were far lower than anticipated.

"Possible causes have been as variously and widely attributed as the re-emergence of commercial user's March year-end budgets and the volcanic ash disruption," he stated.

Whatever the reasons, Phillips noted the fall off in demand was reflected in its sales for April but it was too early to assess the impact for the remainder of the year. 

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