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 40-plus 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.
Systemax maintains two business segments -- technology products (89% of sales) and industrial products (11%).
Beyond North America, Systemax has its eye on Europe, and to a much lesser extent Asia. The company's international business contributed 28% of 2012 sales. Overseas sales growth has outpaced North America in recent years. The acquisition of WStore Europe, an IT products supplier for small and midsized businesses in the UK and France, for $4 million in late 2009 has helped fuel overseas sales. WStore complements Systemax's Misco brand, which is geared largely to individual consumers and the public sector in Europe. Since the deal's completion, Systemax has integrated WStore's operations.
The company is opening a shared services center in Budapest, Hungary, to facilitate the continued growth of its European Technology Products business. This new facility will provide certain administrative and back office services for the existing European business and will serve as the sales location for future business in Eastern Europe.
Mergers and Acquisitions
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.
Thanks to weakness in the company's North American consumer television, Web, and retail store revenue, Systemax in 2012 logged dwindling sales across its Technology Products segment, which accounted for 89% of revenue. Overall, revenue dropped 4% in fiscal 2012 as compared to 2011. Declines were offset in part by the European business due to business sales growth. Industrial products accounted for 11% of the consolidated revenues in 2012.
Systemax logged net loss increases of 115% during the same reporting period. The company attributes the net loss rise to the revenue decreases and to net special charges of approximately $46.3 million related to asset impairment charges in the North American Technology Products business. In 2011 the company recorded a net special gain of about $5.6 million primarily related to the investigation and settlement with a former Systemax officer and director.
Sales and Marketing
Systemax, which spent some $57.7 million on advertising in 2012, counts businesses, government agencies, schools, and individuals among its consumers.
The Leeds family, including Chairman and CEO Richard Leeds, runs and owns about 89% of Systemax.