PC Mall Incorporated is a direct marketer of technology products, services and solutions to businesses as well as consumers. They utilize retail websites as well as 4 full color catalogs: PC Mall, MacMall, PC Mall Gov and SARCOM.
The theme of this call was pricing pressure. CEO Frank Khulusi was pleased with the net sales increase of 1% but the problem lies in the gross margins, operating profit was down 62% in the fourth quarter.
- Net sales for Q4 2009 were $337.0 million, up 1% year-over-year (y/y)
- Gross profit for Q4 2009 was $40.5 million, down 7% y/y
Regarding specific sectors, gross profit was down across the board except for Public which simply reiterates pricing pressures.
- SMB gross profit decreased by $1.3 million, or 9%
- MME gross profit decreased by $1.5 million, or 8%
- Public Sector gross profit increased by $1.2 million, or 30%
- MacMall gross profit decreased by $1.4 million, or 18%
The economic downturn has made everyone squeeze including most of PC Mall’s vendors. When asked about continued pricing pressure and lower margin deals in the future, PC Mall said that it was confident in the normalization of margins by the end of the quarter. Many of their current suppliers have begun to circle back and review their decisions hoping to normalize pricing and relations.
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