CompUSA 2009 Annual Report Download - page 2

On the web front, the major event during 2009 was the acquisition and relaunch of CircuitCity.com. The site is ramping up nicely
and generated significant sales during 2009. We continue to build Circuit City’s brand awareness and reactivate customers. In the
near-term we are concentrating on expanding our product offerings by adding additional categories and further improving our
overall performance. Circuit City is a prized asset that has significant value outside of e-Commerce and we are currently exploring
additional opportunities to extract that value. Additionally, TigerDirect.com, our largest direct sales website in terms of revenue,
continues to perform well and maintained its rank as one of the top rated e-Commerce sites for online retailing of computer
products and consumer electronics.
Business to Business Channels
Our Business to Business (B2B) channels were the most affected by the economic slowdown. B2B Channel sales were down
almost 5% compared to 2008 driven by a soft performance in Europe, where we have a physical presence in seven countries and
sell into 14 countries. Like last year, our performance in Europe differed substantially by country with continued challenges in
Spain, Germany, and Italy, whose economies remain weak. The bright side in Europe was the U.K., our largest European
operation, and France, where sales modestly increased excluding any contribution from the WStore Europe acquisition in
September. The acquisition complements our existing MISCO operations with minimal overlap. We are excited by this growth
opportunity, which essentially doubles the size of our business in France and enhances our existing operations in the U.K. While
we have made substantial progress on the integration of WStore Europe this process remains in its early stages. As such, we expect
to begin to realize the full financial benefit of this acquisition later this year.
In North America, we expect B2B to offer significant growth opportunities for Systemax, as IT spending in the enterprise sector
improves. In anticipation of this recovery, in 2009 we opened two new sales offices and we are selectively opening small B2B offices
within a number of retail stores in our most attractive SMB markets. Thus far we are pleased with the results of these new offices
and the response from our customers. In our Industrial Products Group, sales for the full year were down, but the segment continued
to generate strong margins and had a positive impact on our bottom line. As in our other B2B channels, we started seeing some initial
signs of recovery toward the end of 2009, driven by our expanding product offerings and improved customer website, as well as
somewhat improved business conditions. We continue to make prudent investments to improve our market position in this segment,
while carefully controlling costs.
Other Events
In my letter last year I told you we were closely monitoring our ProfitCenter Software (“PCS”) hosted software business and in
June we made the difficult decision to exit this business. We concluded it was in the best interests of the Company and its
shareholders to reduce our investment in the software business, allowing us to focus on our core businesses and most promising
growth opportunities. We continue to utilize the PCS application within our own businesses but have ended most of our external
customer relationships.
Systemax remains a profitable and growing business that is well positioned for the future. While the macro economic environment
is showing some signs of stabilizing, uncertainty remains. However, we are taking the necessary strategic steps to build and grow
our businesses. In 2010 we will continue to drive revenue growth by leveraging our portfolio of brands and exploring opportunities
in both new and existing markets. Overall, we are confident in Systemax’s long-term growth potential and in our ability to
successfully execute our strategic plan.
Thank you to our stockholders for your support, to our customers and vendors for your loyalty, and to our employees for your hard
work and commitment to the Company.
Sincerely,
Richard Leeds
Chairman and Chief Executive Officer
April 26, 2010