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Systemax Reports Lower Profit On Record Sales

11/11/2010 09:11:55 AM Eastern

Port Washington, N.Y. - Systemax, a maker and retailer of PCs,
peripherals and other CE products, posted a 32 percent decline in net income,
to $8.6 million, despite record third-quarter sales.

Net sales rose 14 percent to $862.7 million for the three months,
ended Sept. 30, which included a 3 percentage-point boost from favorable
exchange rates and the contribution from its French e-tail subsidiary WStore.

Chairman/CEO Richard Leeds attributed the profit shortfall to the
still-challenging marketplace, and gross and operating margin pressure from
discounted shipping, competitive pricing, limited vendor funding, start-up
costs for a new distribution center in Georgia, and one-time charges for the
integration of WStore.

"We remain focused on improving our bottom line performance, as we
look to control costs and increase the efficiency of our operations," he said.

Leeds said the strong top-line results stemmed from "solid
performances" in the company's business-to-business technology and industrial
operations, as well as improvement in its consumer channel unit, which includes
TigerDirect and CompUSA stores and websites, CircuitCity.com, call centers and
TV shopping networks.

 Sales for the consumer
segment rose 6 percent to $427.5 million during the quarter, including a 1
percentage-point assist from favorable exchange rates and WStore, while
same-store sales increased 4 percent.

"We are encouraged by the initial results of our [TigerDirect and
CompUSA] co-branding initiative and have already begun to see increased traffic
as a result of this effort," said Gilbert Fiorentino, chief executive of
Systemax's technology products group. "Additionally, the opening of our new
Georgia facility, which includes a distribution center, call center and retail
store, will allow us to further improve our logistical capabilities and will be
integral to profitably growing our revenues in the future."

Separately, Systemax entered into an amended and restated credit
agreement with a syndicate of leading banks last month. The secured asset credit
agreement provides for a five-year revolving credit facility of $125 million,
with the opportunity to increase to $200 million, subject to terms and
conditions.