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By | Paul Kunert 2nd November 2011 11:21

Systemax blows £250k on ex-CEO legal probe bills

Misco parent turns profit despite retail meltdown

Rising biz sales fuelled Systemax's third quarter even though the consumer spending freeze showed no signs of thawing.

The parent of the Tiger Direct, CompUSA, Misco and WStore recorded a 4 per cent rise in turnover for the period ended 30 September, raking in $901m (£562.5m). The firm's operating income climbed 58 per cent to $19.1m (£11.9m), earning it $10.6m (£6.6m) in net profits – a 23 per cent spike.

But it was a tale of two segments as B2B sales grew 12 per cent on a constant currency basis to $508m while retail sales slumped 9 per cent to $393m.

"Our retail stores delivered another solid quarterly performance; however, our consumer related sales remain challenging, particularly on the web," said CEO Richard Leeds.

Gross margin improved 120 basis points to 14.6 per cent on the back of efforts to drive efficiency including inventory turns and stockholding, IT investments and getting better use from its distribution centres.

The firm recorded special pre-tax charges in the quarter of $400,000 (£249.672) for legal and professional fees related to its "investigation and settlement" with disgraced former exec Gilbert Fiorentino, who resigned in May and is the subject of an SEC probe.

During its calendar Q2, the reseller-come-retailer recorded a net gain of $6.2m after legal fees as Fiorentino paid back some $11m in salary and bonuses following his exit.

For the past nine months to date, Systemax sales were up 2 per cent to $2.7bn on a content currency basis, including a 10 per cent rise in B2B revenues to $1.5bn and a 4 per cent decline in consumer to $1.2bn. Operating income is up 23 per cent to $59.6m. ®

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