CDW 2014 Annual Report Download - page 48

Table of Contents
The following table presents our net sales by customer channel for our Corporate and Public segments and the year-over-
year dollar and
percentage change in net sales for the years ended December 31, 2013 and 2012. Net sales of $150.1 million and $124.2 million for the years
ended December 31, 2013 and 2012 have been reclassified from the small business customer channel to the medium/large customer channel to
conform to the 2014 presentation.
Total net sales in 2013 increased $640.4 million , or 6.3% , to $10,768.6 million , compared to $10,128.2 million in 2012. There were
254 selling days for both the years ended December 31, 2013 and 2012. The increase in total net sales was primarily the result of growth in
hardware and software, a more tenured sales force, a continued focus on seller productivity across all areas of the organization and the addition
of nearly 120 customer-facing coworkers, the majority in pre- and post-sale technical positions such as technical specialists and service delivery
roles. Our total net sales growth for the year ended December 31, 2013 reflected growth in notebooks/mobile devices, netcomm products and
software. Software gains were driven by growth in security, document management software and network management software, partially offset
by a decline in application suites.
Corporate segment net sales in 2013 increased $447.3 million , or 8.1%
, compared to 2012, driven by sales growth in the medium/large
customer channel. Within our Corporate segment, net sales to medium/large customers increased 10.5% between years primarily due to certain
of these customers increasing their IT spending, a more tenured sales force, a continued focus on seller productivity and additional customer-
facing coworkers, the majority in pre- and post-sale technical positions such as technical specialists and service delivery roles. This increase was
led by unit volume growth in netcomm products and growth in notebooks/mobile devices and software. Partially offsetting the growth in the
medium/large customer channel was a 3.5% decline in net sales to small business customers, due to certain of these customers taking a more
cautious approach to spending as macroeconomic and regulatory uncertainty impacted decision-making. This decrease was led by unit volume
declines in notebooks/mobile devices, partially offset by growth in netcomm products.
Public segment net sales in 2013 increased $141.5 million , or 3.5% , between years, driven by strong performance in the education
customer channel. Net sales to education customers increased $256.7 million , or 21.5% , between years, led by growth in net sales to K-12
customers, reflecting increased sales of notebooks/mobile devices to support new standardized digital testing requirements that will take effect in
2014. Net sales to government customers decreased $143.5 million , or 10.3% , in 2013 compared to 2012 due to reductions and delays in
federal government spending following sequestration, uncertainty over future budget negotiations and the partial shutdown of the federal
government. The government customer channel net sales decline was led by decreases in sales of enterprise storage and notebooks/mobile
devices, partially offset by growth in software. Net sales to healthcare customers increased $28.3 million , or 2.0% , between years, driven by
growth in notebooks/mobile devices and desktop computers.
Gross profit
Gross profit increased $90.7 million , or 5.4% , to $1,760.3 million in 2013, compared to $1,669.6 million in 2012. As a percentage of
total net sales, gross profit decreased 20 basis points to 16.3% in 2013, down from 16.5% in 2012. Gross profit margin was negatively impacted
30 basis points by unfavorable price/mix changes within product margin, as we experienced product margin compression in transactional
product categories such as desktops and notebooks. Partially offsetting this decrease was an increase of 10 basis points due to a higher mix of net
service contract revenue. Net service contract revenue, including items such as third-
party services and warranties, has a positive impact on gross
profit margin as our cost paid to the vendor or third-party service provider is recorded as a reduction to net sales, resulting in net sales being
equal to the gross profit on the transaction.
44
(in millions)
Years Ended December 31,
2013 2012 Dollar Change Percent Change
Corporate:
Medium / Large
$
5,052.7
$
4,572.7
$
480.0
10.5
%
Small Business
907.4
940.1
(32.7
)
(3.5
)
Total Corporate
$
5,960.1
$
5,512.8
$
447.3
8.1
%
Public:
Government
$
1,250.6
$
1,394.1
$
(143.5
)
(10.3
)%
Education
1,449.0
1,192.3
256.7
21.5
Healthcare
1,464.9
1,436.6
28.3
2.0
Total Public
$
4,164.5
$
4,023.0
$
141.5
3.5
%