Systemax profits tumble as US punters keep wallets closed

Systemax CEO Richard Leeds said he's disappointed by calendar Q1 numbers as profits fell by almost 50 per cent due to flagging US consumer electronics sales.

The group - which operates the Misco and WStore brands in Europe, and Tiger Direct, Circuit City and CompUSA stateside - saw turnover slide one per cent year-on-year to $913.6m, but operating profits fell 43 per cent to $10.6m and net profits fell 48 per cent to $7m.

The bottom line included a one-off charge of $1.9m related to senior staffing changes in the North America tech business; legal and professional fees for an investigation; a settlement with a former exec; and the relocation of a distie centre.

"On an overall basis, I am disappointed in our results for the quarter," said 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."

Continuing a dynamic that began last year, B2B sales continue to grow as a proportion of group turnover, up eight per cent on Q1 2011 to $512.7m - but the retail business, which is largely in the US, declined ten per cent to $400.9m.

Operating margin dropped from two per cent in the same period a year ago to 1.2 per cent.

"Efforts to improve margins showed mixed performance … significantly impacted by the results of our North American technology business," said Leeds. ®