Systemax Inc., parent company of Tiger Direct technology and computer goods retailer, announced Wednesday it will be closing 31 of its 34 stores to focus on other revenue channels, leaving just one surviving location in Puerto Rico.
During a conference call with investors to discuss its fourth quarter results, Systemax CEO Richard Leeds said the company expects the closings to be completed by the end of the second quarter, after which it will continue to focus on growing its business-to-business (B2B) segment.
“Upon completion, we plan to continue in operating three retail locations; one in a technology products distribution center; one located in Puerto Rico, which has significant B2B operations in that market; and the well known Flagway Miami location, which is adjacent to our North American tech headquarters,” he said.
Company spokesperson Mike Smargiassi confirmed Thursday the Ponce store at Plaza del Caribe will be closing on or before June 30.
In recent quarters, Systemax has bet on strong B2B business, which last year delivered solid growth, with revenue up over 4 percent in the quarter and full year.
In contrast, the performance of its consumer business remains “soft, which led us to the strategic and operational announcements that we made today,” said Leeds.
“These are difficult decisions to make. But the dynamics of the consumer market make the necessary, and we’re moving forward with them at an extensive review and planning process. I would like to personally thank all of our employees for their efforts and specifically those directly impacted by these difficult decisions,” he said.
The company expects to incur in between $50 million and $55 million in severance costs, Systemax CFO Lawrence Reinhold said during the investor call.
Systemax entered the Puerto Rico market in 2008, when it picked up the CompUSA brand, trademarks and e-commerce business from the former tech retailer. When it made its debut, it closed CompUSA locations in Carolina and Bayamón, keeping only the Guaynabo store open for business. In April 2012, it opened a second location at the Plaza Del Caribe mall in Ponce, as this media outlet reported.
At the end of the fourth quarter of 2014, Systemax had working capital of more than $312 million, cash and cash equivalents of more than $165 million, and availability under its credit facility of $116.4 million. Short and long-term debt totaled approximately $3.6 million at December 31, 2014.