Systemax profits fall by a third as pricing pressures mount

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Systemax profits fall by a third as pricing pressures mount

Microscope contributor

Systemax profits have tumbled by nearly a third off the back of pricing pressures in the ultra competitive US consumer space.

The stateside owners of multiple channel brands including Misco and WStore grew its top line by 14% to $862.7m in Q3 but profits dropped almost 32% to $8.6m.

The B2B technology operation soared 24% to $435.2m and consumer sales were up 6% to $427.5m.

"However, the consumer environment and competitive landscape is still challenging and both gross margin and operating margins remain under pressure," said Systemax chief executive Richard Leeds.

Gross margins fell from 15% in Q3 2009 to 13.5%, which Leeds attributed to a combination of factors: "The continued effect of discounted stock freight; competitive consumer pricing which was not offset by sufficient vendor funding; and start up costs of $1.4m for our new Georgia facility."

Operating margin nearly halved year-on-year from 2.6% to 1.4% due to the one-time charges connected to Systemax's WStore integration, with the process due to complete in France by the end of the year.

The business channels in Europe were "strong" said Gilbert Fiorentino, boss at Systemax Technology Products Group.

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