Tech Data sales suffer in tough economy

Global distributor Tech Data has reported a drop in net sales as it struggles with weakening demand.

Third quarter net sales were $6.04 billion, a decrease of $6.59 billion at the same point last year, with Tech Data CEO Robert M. Dutkowsky pointing towards low spending from customers. Operating income also fell, down 22 percent to $69.5 million.

“During our third quarter we continued to face weak macro-economic environments and slowing demand, as well as challenges in our U.S. operations following the implementation of certain SAP modules in the second quarter,”  Dutkowsky said. “Our worldwide operating performance, which fell short of our plan and prior year, reflects the ongoing impact of these challenges.”

Net sales in the Americas, covering North America and South America were $2.37 billion, representing a decrease of 15 percent year on year.  However, he said that, despite difficulties in the Eurozone, the distributor saw decent results in the region, delivering higher sales and improved operating income than in the Americas.  In Europe, where Tech Data does most of its business, sales totaled $3.67 billion, a four percent decrease.

Dutkowsky also highlighted the acquisitions made in the third quarter.  This included the recent buyout of SDG as the company focuses on enterprise sales amid some major consolidation in the distribution market.  The company also bought out its mobility joint venture, which is to be rebranded Tech Data Mobile.

“Both of these transactions support our diversification strategy and highlight our commitment to delivering improved earnings to our shareholders,”  Dutkowsky said.

Looking forward, Tech Data is expecting low single digit sales growth, as well as improvements in gross and operating margins.