Wednesday, March 11, 2015

Systemax exits the retail business to focus on B2B

Systemax Inc. will close most of its retail stores as the company shifts its focus to its B2B operations. The company, which operates Tiger Direct stores, made the announcement as it revealed
 financial results for the fourth quarter ended December 31, 2014. Only one store in Puerto Rico will remain open.

Richard Leeds, Chairman and Chief Executive Officer, said that while all of the company's B2B channels delivered revenue growth, the retail business struggled.

In addition to "substantially exiting the retail business, the new focus on B2B and public sector customer focus in its North America Technology Products business calls for the closing of a distribution center and implementing a general workforce reduction. Systemax has hired Gordon Brothers to assist with the retail store process and anticipates that all of these actions will be completed by the end of the second quarter.

"This was a difficult decision, but one that reflects the opportunity we see in the B2B marketplace as well as the realities of how the consumer market has changed over the past few years. It will allow us to place additional resources behind our B2B growth initiatives and will be accretive to our financial performance after one-time costs. We expect this strategic realignment to result in a more streamlined and focused operating platform. Once completed, all of our operations across Europe and North America will be B2B centric, a channel we have served continuously since Systemax's founding over 65 years ago and where we see continued growth across all our geographic markets," Leeds concluded.

The Company expects one time exit and severance costs, will total between $50 million and $55 million. After completion the Company expects to realize improved annual profitability of between $18 million and $22 million on a pre-tax basis. 


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