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Systemax Q1 Earnings Fall 48%

5/01/2012 05:01:35 PM Eastern

Indianapolis - Weakness
in its domestic CE retail business sent first-quarter net earnings down 47.8
percent to $7.1 million for IT vendor and merchant Systemax.

Profits were also
impacted by a $1.9 million pre-tax charge for the addition of three senior retail
executives
in March; legal and professional fees for the investigation of,
and settlement with, former retail chief executive Gilbert
Fiorentino
; and the planned consolidation of a call center.

Net sales slipped 2
percent to $913.6 million for the three months ended March 31, but consumer
sales through the company's CompUSA, TigerDirect and CircuitCity.com properties
-- as well as through TV shopping networks and its inbound call centers and
Misco and WStore European CE chains -- fell 11 percent to $400.9 million.

The decline was
partially offset by a 7-percent increase in business-to-business sales of
$512.7 million.

Comp store
consumer sales sank 14 percent, business-to-business comps rose 8 percent, and
operating income decreased 43 percent to $10.6 million due to soft retail sales
in North America.

"On an overall
basis, I am disappointed in our results for the quarter," said chairman/CEO
Richard Leeds. "The performance of our North America technology consumer
business was below our internal expectations and masks the strong performance
in the rest of the business. We are highly focused on re-establishing revenue
growth and improving profitability in this business."

Leeds said the
company is well positioned for the future thanks to its strong balance sheet
and its diversified, web-centric, multi-channel model.