Systemax, Inc. (SYX) Misses Q4 EPS by 22c, Revenue Beats, to Exit Retail Ops, Cut Jobs

Systemax, Inc. (NYSE: SYX) reported Q4 EPS of ($0.04), $0.22 worse than the analyst estimate of $0.18. Revenue for the quarter came in at $912.6 million versus the consensus estimate of $871.5 million.

Richard Leeds, Chairman and Chief Executive Officer, said, "Fourth quarter performance was similar to the trends we have witnessed throughout 2014, with all of our B2B channels delivering revenue growth, while our retail business struggled. Our results highlight the focus we have placed on our B2B channels during the past several years and the opportunities we see in this business. Our Industrial Products Group again grew tremendously, generating full year revenue of $556 million, up 17% from 2013. Across our worldwide B2B operations we continue to make investments to strengthen our market positions by bringing more value to our customers, through improved service levels, an expanded product offering and the introduction of new solutions capabilities."

Leeds continued, "After an extensive review and planning process, we are taking actions immediately to accelerate our B2B and public sector customer focus in our North American Technology Products business. These actions will include the exit of substantially all retail store operations; closing a distribution center; and implementing a general workforce reduction to realign our resources solely with our B2B focus. We have engaged Gordon Brothers to assist with the retail store process and anticipate that all of these actions will be completed by the end of the second quarter."

"This was a difficult decision, but one that reflects the opportunity we see in the B2B marketplace as well as the realities of how the consumer market has changed over the past few years. It will allow us to place additional resources behind our B2B growth initiatives and will be accretive to our financial performance after one-time costs. We expect this strategic realignment to result in a more streamlined and focused operating platform. Once completed, all of our operations across Europe and North America will be B2B centric, a channel we have served continuously since Systemax's founding over 65 years ago and where we see continued growth across all our geographic markets. On a personal note, I want to thank our employees who have worked hard in the retail business over the past years," Leeds concluded.

The Company expects one time exit and severance costs, will aggregate between $50 million and $55 million. After completion the Company expects to realize improved annual profitability of between $18 million and $22 million on a pre-tax basis.

For earnings history and earnings-related data on Systemax, Inc. (SYX) click here.

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