Tech Data on its crappy Q2: Don't blame us, blame the strong dollar

Distributor's profits drop in lacklustre second quarter


Distribution giant Tech Data, daddy of Computer 2000 and Azlan in the UK, has disappointed investors with a blip in its second quarter results.

Net sales for the firm slipped 7.6 per cent from the same quarter last year to $5.96bn while net income dropped 26 per cent to $38.3m from $51.7m in 2011.

The company said that foreign currencies weakening against the dollar were partly to blame for its less than impressive sales figures. Tech Data also changed the way it tots up vendor warranty services and certain fulfilment contracts, putting them in as agency fees instead of in the sales column, which made it look bad as well.

But the distie also admitted that "competitive pricing pressure" was having an affect on its profits.

"After reporting a solid first quarter, our second quarter earnings fell short of our expectations and last year's results," CEO Robert Dutkowsky said in a canned statement.

"Although worldwide net sales came in slightly ahead of plan and our European operations generated the region's highest second-quarter sales and operating income, in euros, in its history, our gross margin was impacted by mix, as well as competitive pricing in both regions."

Tech Data isn't expecting things to perk up too much in the third quarter either. The firm is forecasting a single-digit decline in sales in its Americas region, where it bags around 40 per cent of its custom. It is still disentangling itself from its Brazilian and Colombian operations after pulling out of the countries at the start of fiscal 2012. ®


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