Systemax's system involves being direct. The company is primarily a direct marketer of computers, electronics, and technology products in North America and Europe. Through 15 catalogs, some 25 websites, and more than 35 retail stores, it offers thousands of brand-name and private-label items. The company assembles its own computers, which are sold under the Systemax and Ultra brands. Systemax also sells material-handling equipment, shelving, storage items, furniture, and other industrial products. Customers include businesses, government agencies, and schools, as well as individual consumers. After acquiring the assets of defunct retailers CompUSA and Circuit City, Systemax exited the software business.
New York-headquartered Systemax rings up about 60% of its sales in the US, nearly 15% in the UK, and 10% in France. Other markets in Europe and North America contribute the remainder.
Systemax maintains two business segments -- technology products (86% of sales) and industrial products (14%). In Europe the company operates under the Misco brand.
Sales and Marketing
Systemax, which spent some $60.1 million on advertising in 2013, counts businesses, government agencies, schools, and individuals among its consumers.
Due to weakness in Systemax's Technology Products business, which includes both North America and Europe, revenue fell 5% in 2013 versus 2012, to $3.4 billion. The drop off, which spanned most product categories, was largest in consumer electronics. Lower selling prices for personal computers and televisions hurt results. The decline in Technology Product sales was partially offset by an 18% increase in sales of Industrial Products. The company credited the rise to new product offerings on its websites, solid sales of its core offerings, and expansion of its private-label and brand-name selections.Systemax's B2B channel, driven by Industrial Product segment growth, outperformed the B2C channel.
Lower sales contributed to the steep decline in net income in 2013. The company posted a loss of $43.8 million for the year, after losing $8.3 million in 2012. An increased provision for income taxes and higher SG&A expenses contributed to the wider loss. Those two factors also led to a $28 million decline in cash flow from operations in 2013, to $46.8 million.
Beyond North America, Systemax has its eye on Europe, and, to a much lesser extent, Asia. The company's international business contributed about a third of 2013 sales, versus 27% five years ago. Overseas sales growth has outpaced North America in recent years. In 2013 the company opened a shared services center in Budapest, Hungary, to facilitate the continued growth of its European Technology Products business. This new facility provides certain administrative and back office services for the existing European business and serves as the sales location for future business in Eastern Europe. The company is also building its European operations through acquisitions.
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.
Mergers and Acquisitions
In June 2014, Systemax acquired SCC Services B.V., a supplier of business-to-business IT products and services with operations in the Netherlands.
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. It paid $14 million in cash. 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 Leeds family, including Chairman and CEO Richard Leeds, runs and owns about 89% of Systemax.