IT MAY BE TOO SOON TO CELEBRATE, but fourth-quarter financial results among the publicly traded business-to-business and computer products merchants tracked by Multichannel Merchant suggest the beginning of an economic recovery.
Of the 11 profiled companies, eight showed revenue gains and six recorded bottom line improvements. The average revenue increases were 5.8% and 2.2% for the b-to-b and computer product segments, respectively.
Reported earnings in the two segments varied dramatically in the fourth quarter, however. While the b-to-b merchants tracked saw an average increase in net income of 32.8% over the prior period, the computer products segment saw mixed earnings reports. For instance, PC Mall’s income fell 91.6%, Wayside Technology stayed flat, Black Box Corp. gained 12.1% and PC Connection posted positive earnings after a loss in the prior period.
“Consumer and business spending has begun to show a tentative return, illustrated by the mixed sales results,” says Stuart Rose, managing director for investment firm Tully & Holland. “The dramatic fluctuation in earnings in both segments is a product of each company’s financial position a year ago, and the actions they have taken since then to improve operating efficiencies.”
Maintenance repair and operations supplies merchant MSC Industrial Direct Co. registered an 11.1% sales loss for the quarter, while wireless communications marketer Tessco Technologies saw its sales rise nearly 26%, to nearly $150 million for the period. What’s more, Tessco’s bottom line soared 134%.
Henry Schein’s sales rose 13%, while net income jumped 54%. Last year’s fourth-quarter numbers for the healthcare products and services provider included restructuring and discontinued operations; plus, this year international sales were particularly strong.
Also, Henry Schein’s fourth quarter last year included a $7 million loss from discounted operations related to exiting a wholesale ultrasound business. With no similar loss this year, net income jumped, Rose says.
What does the future hold? Quarter-over-quarter comparisons will be more dramatic over economically volatile time frames, Rose says. “As consumers and businesses show pockets of renewed spending, we would expect to continue to see mixed financial results from the b-to-b and computer products segments for at least the next two quarters.”
The economy as a whole will continue a slow recovery, he says, “with a growth rate adjusting lower as the large impact of inventory purchasing will diminish going forward.”
| REVENUE | NET INCOME (LOSS) | |||||
|---|---|---|---|---|---|---|
| Company | 12 months prior | Current quarter | Increase (decrease) | 12 months prior | Current quarter | Increase (decrease) |
| ($000) | ($000) | |||||
| Black Box Corp. | 261,853 | 253,385 | (3%) | 9,827 | 11,019 | 12% |
| Deluxe Corp. | 364,900 | 340,300 | (7%) | 27,900 | 30,500 | 9% |
| Henry Schein | 1,581,179 | 1,786,081 | 13% | 55,959 | 86,408 | 54% |
| MSC Industrial Direct | 433,022 | 384,817 | (11%) | 45,095 | 31,420 | (30%) |
| PC Connection | 439,113 | 463,121 | 5% | (2,709) | 3,967 | NM |
| PC Mall | 334,298 | 337,000 | 1% | 984 | 83 | (92%) |
| Sport Supply Group | 53,175 | 55,529 | 4% | 1,052 | 922 | (12%) |
| Systemax | 812,700 | 938,200 | 15% | 9,900 | 18,400 | 46% |
| Tessco Technologies | 118,943 | 149,721 | 26% | 1,241 | 2,907 | 134% |
| Transcat | 19,992 | 21,823 | 9% | 342 | 483 | 41% |
| Wayside Technology | 40,030 | 42,292 | 6% | 902 | 900 | 0% |
Source: Tully & Holland
