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Systemax To Cut Circuit City, CompUSA Brands; Exits PCs

11/04/2012 07:00:00 PM Eastern

PORT WASHINGTON, N.Y. – Sys- temax will consolidate its North Ameri- can consumer businesses under the TigerDirect brand, drop the CompUSA and Circuit City brands by the end of the year, and exit the PC manufactur- ing business.

News came in its quarterly financial report in which Systemax reported sales of $846.3 million in the quarter, ended Sept. 30, down from $900.2 million in the prior year. Net income was $13.9 million in the quarter, up from the prior year’s $10.6 million.

Systemax reported that consolidat- ing its North American businesses un- der TigerDirect would be “optimized” and it will record one-time, non-cash impairment charges related to the in- tangible assets of CompUSA and Cir- cuit City of approximately $34 million, pretax, in the fourth quarter of 2012.

Regarding its PC decision, System- ax said it would continue service and support for its previously sold PCs. As a result of exiting this business, it expects to incur aggregate one-time charges of approximately $6 million to $8 million, pretax, in the fourth quar- ter of 2012 and during 2013 for asset impairment, exit and severance ex- penses. Systemax “anticipates that the opportunity benefit of strengthening its strategic relationships with vendor partners within the desktop PC cat- egory should provide improved profit- ability of between $1 million and $2 million, pretax, on an annual basis.”

In its third-quarter report, Systemax said consolidated sales decreased 6 percent to $846.3 million in U.S. dol- lars. On a constant currency basis, sales decreased 3.3 percent. B to B channel sales grew 3.8 percent to $526.8 million in U.S. dollars. On a con- stant currency basis, sales grew 8.8 percent. On a same-store and constant currency basis, sales grew 9 percent.

Consumer channel sales declined 18.6 percent to $319.5 million in U.S. dollars. On a constant currency basis, From left, CEA’s Jeff Joseph, LG’s John Taylor and Tom Campbell of Video & Audio Center Systemax To Cut Circuit City, Comp USA Brands; Exits PCs (continued from page 10) sales declined 19.2 percent. On a same-store and constant currency basis, sales declined 19.6 percent, the company noted.

The operating loss from continu- ing operations, which includes $2 million of special charges, was $1.9 million, compared with operating income from continuing operations of $19.3 million in the third quarter of 2011. The decline was primarily a result of the performance of its North America technology consum- er business and special charges previously mentioned.

Richard Leeds, chairman/CEO, commented in a statement on “con- tinued weakness in our North Amer- ican consumer business… is largely driven by industry trends that in- clude soft demand for PCs and a number of consumer electronics products.”

He noted, “We harvested signifi- cant value from the CompUSA and Circuit City acquisitions and are now moving forward with a single and unified consumer platform in the United States that will drive ef- ficiencies in advertising and cus- tomer acquisition. In addition, exit- ing the PC manufacturing business will allow us to focus resources on our growth opportunities and other strategic initiatives.”