CompUSA 2015 Annual Report Download - page 32

Table of Contents
Management’sdiscussionandanalysisthatfollowswillincludeIPG,EMEA,NATGcontinuingoperationsandNATGdiscontinuedoperations.Thediscussionis
basedupontheGAAPResultsofOperationstable.
NET SALES
SEGMENTS:
TheIPGsegmentnetsalesbenefitedfromcontinuedgrowthacrossmostproductlinesandincrementalsalesfromtheP.E.G.acquisition,whichcontributed$89.1
millioninsalesandapproximately $1.1millionofpretax earningsduring2015,aswellas investment inhiringsales personnelandsubject matter expertswho
bringspecifictechnicalknowledgetoourcustomers.Onaconstantcurrencybasis,andexcludingP.E.G.,netsalesincreased10.1%during2015.
TheIPGsegmentnetsalesincreasein2014wasattributabletotheexpansionoftheproductassortmentinnewandcoreproductcategories,theexpansionofthe
privatelabelandbrandnameselectionsaswellasinvestmentinhiringexpertsalespersonnel.Onaconstantcurrencybasis,salesincreased17.7%during2014.
TheEMEAsegmentnetsalesdecreaseisattributabletounfavorablecurrencymovementsandachallengingmarketintheUnitedKingdomwhichmorethanoffset
theperformanceinothermarkets.OurFranceoperationscontinueditsstrongperformance(localcurrencyincreaseof19.1%),benefitingfromcontinuedgrowthin
itscorebusinesses.OnaconstantcurrencybasisandexcludingMiscoSolutions,EMEAsegmentnetsalesdecreased1.9%for2015.
TheEMEAsegmentsalesincreasein2014wasduetoabenefitfromtheJune2014MiscoSolutions(f/k/aSCCServicesB.V.)acquistion,strongsalesgrowthin
France,improvedBTBsalesfromcertainmarkets,andfavorableexchangerates.Onaconstantcurrencybasis,andexcludingtheMiscoSolutionsacqusition,net
salesincreased0.9%for2014.
TheCorporateandOthersegmentnetsalesdecreaseisattributabletothedecreaseinrebateprocessingbusinesswhichwasimpactedbytheexitfromourNATG
operationsfor2015.
TheCorporateandOthersegmentnetsalesincreasein2014was13.5%primarilyduetoincreasedsalesintherebateprocessingbusinessfor2014.
SalesinNATGcontinuingoperationsrepresentthesalesoftheretailstoresclosedduringthefirsthalfof2015.Salesfor2014representfullyearsalesofretail
storesclosedin2015andsalesofstoresclosedduring2014.Salesfor2013representfullyearsalesofretailstoresclosedin2015and2014andsalesofstores
closedduring2013.
GROSS MARGIN
Consolidatedgrossprofittotaled$342.7million,$377.2millionand$360.7millionfortheyearsendedDecember31,2015,2014and2013,respectively.Gross
marginisdependentonvariablessuchasproductmix,competition,pricingstrategy,cooperativeadvertisingfundsclassifiedasareductiontocostofsales,freight
andsupply/chainsourcingdecisions,discountingandothervariables,anyorallofwhichmayresultinfluctuationsingrossmargin.
TheIPGsegmentgrossmarginwasnegativelyimpactedbyincreaseddistributioncostsassociatedwiththeopeningofanewdistributioncenterinthethirdquarter
of2015andreducedfreightmargin.Weanticipatethatthisnewfacilitywillresultinimprovedgrossmarginsfromfreightcostreductionstowestcoastcustomers
and improved efficiency at the other distribution centers. Product margin improved marginally, driven by growth of certain higher margin categories, and our
privatelabeloffering.
TheIPGsegmentgrossmargindeclinein2014wasdrivenbyproductmixtomoredomesticallysourcedproductsincomparisonto2013.
TheEMEAsegmentgrossmargindeclineisrelatedtoreducedsellingmarginsdrivenbycustomershiftsfromcommercialtopublicsectoraccounts,andlower
freightrevenues.
TheEMEAsegmentgrossmargindeclinein2014wasrelatedtoreducedsellingmargins,particularlyintheUnitedKingdomincomparisonto2013.

30