The loss of a retail supply contract with Argos helped push Ingram Micro’s European sales growth into the barrier’s during car crash Q1 financials.
The US-headquartered tech distributor reported sales of $2.66bn on this side of the pond for the period ended 31 March. This was down 13.35 per cent year-on-year.
Ingram is being slurped by Chinese conglomerate HNA Group for $6bn, and so its execs were not forced to explain the numbers on a conference call, sparing them the blushes.
In an SEC filing the company said the major “revenue declines were driven by Germany, the United Kingdom and France”.
In Germany and France, turnover declined due to “soft” consumer spending on smartphones and PCs. In the UK it blamed falling PC sales and the “loss of a large retail customer”.
Sources have told us Argos put out a tender for its supply business last year and in December, Tech Data managed to squeeze out Ingram as their incumbent supplier. Sources suggested Ingram offered lower upfront funds to be used for marketing, etc.
Ingram stated in its SEC filing that its results were also impacted by forex conversions and by the negotiation of more favourable terms in the prior year period that was not repeated.
The distributor reported an operating loss of $18.4m for the three months versus an operating profit of $6.9m in the year ago quarter.
Worldwide, sales decreased 12 per cent to $9.3bn as North America turnover fell 12.6 per cent to $3.88bn, was down 13.7 per cent in Asia Pacific to $2.19bn but edged up 2.6 per cent in Latin America to $599.7m.
Across the group, selling, general and admin expenses went up significantly, as did amortisation o intangibles and re-org costs, totalling $593.29m versus $519.7m in Q1 2015.
Income from operations was $38.4m, down 60.6 per cent, but after interest expenses, $8.5m of currency losses, and a provision for taxes, net profit was $1.89m, versus $43.2m.
Argos and Ingram Micro did not comment. ®