About Systemax Inc.

Systemax's system involves being direct. The company is primarily a direct marketer of computers, electronics, and technology products in North America and Europe (where it operates under the Misco brand). Through catalogs, websites, and retail stores, Systemax markets thousands of brand-name and private-label computer, networking, camera, GPS, cell phone, video game, and other electronic products. Systemax also sells material-handling equipment, shelving, storage items, furniture, and other industrial products. Its customers include businesses, government agencies, and schools, as well as individual consumers.

Operations

Systemax maintains three business segments. The EMEA Technology Products Group (EMEA) and North America Technology Products Group (NATG) segments make up nearly 85% of the company's total sales combined, and sell computing products (including laptops, desktops and tablets, computer components, and commercial and home networking accessories) and consumer electronics (including TVs, audio equipment, cameras and surveillance, GPS, cell phones, video games and toys, and home and electronics accessories) that are mostly manufactured by other companies to customers in Europe and North America, respectively.

The Industrial Products Group (IPG) segment makes up the remainder of Systemax's total sales, and sells material handling, storage and shelving, workbench and shop desks, packaging and supplies, and other hardware for HVACs, plumbing, and medical professionals. Some of the company branded products are marketed under the Global, GlobalIndustrial.com, Nexel, Relius, Relius Elite, Hercules, Interion, and Paramount trademarks.

Geographic Reach

New York-headquartered Systemax rings up about 36% of its sales in the US, about 18% in the UK, and 21% in France. Other markets in Europe and North America contribute the remainder.

Sales and Marketing

Systemax counts businesses, government agencies, schools, and individuals among its consumers.

For business customers, Systemax uses a multi-faceted direct marketing system comprised of its relationship marketers, catalog mailings, and proprietary internet websites. Systemax markets to consumers online through website campaigns, banner ads, and email campaigns. Its e-commerce initiatives and catalog mailings generate online orders and calls to inbound sales representatives.

Overall, it spent $74.4 million on advertising in 2015, up from $66.1 million in 2014 and $60.1 million in 2013.

Financial Performance

Systemax's sales have declined and its has piled up losses over the past few years, mostly due to weakness in Systemax's Technology Products business as selling prices for computers and televisions have declined.

The company's revenue dropped 46% to $1.85 billion in 2015 as the company closed retail stores in the US and prepared to sell the North American unit. In Europe the company ran into unfavorable changes in currency valuations and a challenging market in the UK.

Systemax posted its fourth straight year of losses with a $99.8 million loss in 2015, compared to a $37 million loss in 2014. Dealing with the closing of North American operations sapped income despite reductions in expenses.

Cash flow from operations increased to $86.5 million in 2015 from a negative $100,000 in 2014.

Strategy

Facing shrinking sales and profits, Systemax has been restructuring its business to turn its situation around. In March 2015, for example, its Technology segments exited the retail store business to renew the company's focus on higher-margin, business-to-business operations. The exit plan involves closing all of its retail stores, a distribution center, and slashing staff to free up resources for investment in the B2B business. The company is also transitioning its retail customer base to online channels. In late 2015 Systemax announced it was selling the B2B part of its NATG business to computer and electronics retailer PCM for $14 million. The deal includes customer lists, vendor contracts, the TigerDirect brand, and other IP related only to Systemax's B2B assets. The sale closed in December 2015.

With overseas sales growth outpacing sales at home in recent years (the company's international business contributed 38% of 2015 sales, Systemax has had its eye on more business in Europe, and, to a much lesser extent, Asia. In 2013, to support and boost its European Technology Products business, Systemax opened a shared services center in Budapest, Hungary, to provide administrative and back office services for the existing European business and serve as the sales location for future business in Eastern Europe. The company has also been building its European operations through acquisitions, as with its 2014 acquisition of Netherlands-based SCC Services.

Systemax is attempting to improve the performance of its European business, in particular Misco in the UK, amid soft sales there. Initiatives include top executive changes and expanding its service offering. The company is trying to run European operations more centrally, which means changing business processes, eliminating duplication, relocating or hiring new personnel, changing IT systems, and integrating the changes into the current operation.

Mergers and Acquisitions

In January 2015, to grow its business in the industrial products market, the company's Industrial Products Group purchased B2B direct marketer Plant Equipment Group (PEG), which specialized in maintenance, repair, and operation (MRO) products, from TAKKT America for $25.9 million cash. The deal expanded the IPG presence in the maintenance, repair, and operations (MRO) market.

In June 2014, Systemax acquired SCC Services B.V., a supplier of business-to-business IT products and services with operations in the Netherlands.

Company Background

Looking to gain from the ruin of failed US electronics merchants, Systemax emerged as the winner for the brand, trademarks, and e-commerce operations of Circuit City in 2009. Although CircuitCity.com relaunched in mid-2009, Systemax said it was too early to determine whether retail stores would also make a comeback.

Unlike Circuit City, Systemax has been expanding CompUSA's network of retail stores. (It acquired CompUSA's brand, trademarks, and e-commerce unit, as well as about 15 retail outlets, for $30 million in 2008.) The company rebranded its more than 10 existing TigerDirect shops as CompUSAs and added five new locations in 2009. It added about half a dozen more CompUSA stores in 2010. Systemax said it purchased the electronics giants in an effort to expand its e-commerce operations, led by TigerDirect, its online computer sales subsidiary.

The company exited the retail business in the US in 2015 with the sale of the operations to PCM.

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Systemax Inc.

11 Harbor Park Dr
Port Washington, NY 11050-4656
Phone: 1 (516) 608-7000

Stats

  • Employer Type: Public
  • Stock Symbol: SYX
  • Stock Exchange: NYSE
  • Chairman: Richard Leeds
  • Vice Chairman: Robert Leeds
  • Vice Chairman: Bruce Leeds

Major Office Locations

  • Port Washington, NY

Other Locations

  • Hoover, AL
  • Huntsville, AL
  • Little Rock, AR
  • Manchester, CT
  • Orange, CT
  • Wilmington, DE
  • Altamonte Springs, FL
  • Boca Raton, FL
  • Clearwater, FL
  • Deerfield Beach, FL
  • Fort Myers, FL
  • Medley, FL
  • Miami, FL
  • Orlando, FL
  • Palm Beach Gardens, FL
  • Tampa, FL
  • West Palm Beach, FL
  • Atlanta, GA
  • Augusta, GA
  • Buford, GA
  • Clive, IA
  • Naperville, IL
  • Rockford, IL
  • Indianapolis, IN
  • Wichita, KS
  • Lexington, KY
  • Louisville, KY
  • Baton Rouge, LA
  • Metairie, LA
  • Baltimore, MD
  • Columbia, MD
  • Glen Burnie, MD
  • Rockville, MD
  • Detroit, MI
  • Lansing, MI
  • Troy, MI
  • Bridgeton, MO
  • Charlotte, NC
  • Raleigh, NC
  • Omaha, NE
  • Nashua, NH
  • Salem, NH
  • East Hanover, NJ
  • Holmdel, NJ
  • Mount Laurel, NJ
  • Princeton, NJ
  • Springfield, NJ
  • Las Vegas, NV
  • New York, NY
  • Rochester, NY
  • Syracuse, NY
  • West Nyack, NY
  • Fairlawn, OH
  • Miamisburg, OH
  • Oklahoma City, OK
  • Tulsa, OK
  • Pittsburgh, PA
  • Carolina, PR
  • Guaynabo, PR
  • Warwick, RI
  • North Sioux City, SD
  • Memphis, TN
  • Nashville, TN
  • Abilene, TX
  • Austin, TX
  • Cypress, TX
  • Dallas, TX
  • Frisco, TX
  • Houston, TX
  • Irving, TX
  • San Antonio, TX
  • Sunset Valley, TX
  • Glen Allen, VA
  • Newport News, VA
  • Norfolk, VA
  • Vienna, VA
  • Iron Ridge, WI
  • Madison, WI
  • Milwaukee, WI
  • Pleasant Prairie, WI
  • Burlington, Canada
  • Calgary, Canada
  • Etobicoke, Canada
  • London, Canada
  • Markham, Canada
  • Mississauga, Canada
  • Richmond Hill, Canada
  • Woodbridge, Canada
  • Le Plessis Robinson, France
  • St Michel, France
  • Langen (Hessen), Germany
  • Neu-Isenburg, Germany
  • Lacchiarella, Italy
  • Hägersten, Sweden
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