Systemax Q1 Earnings Fall 48%

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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 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.


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