What a Difference a Year Makes. Unlike last year — when nearly all of the business-to-business and computer catalog/Web marketers tracked by Multichannel Merchant recorded solid starts — the first quarter of 2009 proved to be a real downer.
Of the 11 companies tracked during the first quarter, only one marketer boosted sales. And only two companies improved their year-over-year bottom lines.
Indeed, says Stuart Rose, managing director of investment bank Tully & Holland, which tracks public companies for Multichannel Merchant, besides the nearly across-the-board sales decreases, company earnings were even worse.
“Revenue declines in the b-to-b sector averaged 8%, while earnings losses averaged 31%,” Rose explains. “In the computer products sector, revenue averaged 18%, while earnings losses averaged 25%.” Why the earnings falloff?
Companies are struggling to pare down their expenses in line with the decline in sales, Rose says. “Since these companies often have large fixed costs, there will be a lag period for companies to reduce expenses to an appropriate level.”
TESSCO takes a tumble
Quarter ended: March 29 The facts: Fourth-quarter sales for wireless communications cataloger Tessco Technologies decreased 23%, to $98.2 million, compared to $128.3 million for the same quarter in 2008. Net income sank 54%, to $785,000, compared to $1.7 million last year. The skinny: While the fiscal fourth was especially bad for both revenue and earnings, revenue for the entire year was down only 7.3% and earnings increased at a rate of 31.3%.
Net income plummets at PC Mall
Quarter ended: March 31 The facts: First-quarter sales for PC Mall decreased 23%, to $259.3 million, down from $336.6 million. The computer reseller’s net income fell 66%, to $1.01 million, from $2.99 million. Rose says PC Mall’s financial position has slipped significantly compared with the first quarter last year. The skinny: The company’s dip in revenue is primarily due to a decline of $41 million, or a 31.5% decrease, in its small- to medium-size business sales, which is its largest segment, Rose says. “Especially concerning is the rapid decline in profitability,” he adds. “PC Mall will need to make further adjustments to its operations in order to return to profitability.”
Small fall for Black Box
Quarter ended: March 31 The facts: Fourth-quarter sales for networking products marketer Black Box slipped 2%, to $241.3 million, from $245.5 million. Net income was down 1%, to $8.35 million, from $8.39 million. The fourth quarter results for Black Box are in line with its overall performance for fiscal 2009, with a 2% decline in revenue and a 1% drop in net income. The skinny: It was a solid year for Black Box, Rose says. “Considering the negative developments in the overall economy, Black Box’s annual revenue remained relatively flat with a decrease 2%.”