Tech Data grows sales with rising demand for digital transformation
The distributor of IT products and services says “the need and desire for businesses of all sizes to transform digitally” was a big contributor to an 11% increase in net sales for its fiscal year ended Jan. 31.
Tech Data Corp. completed its fiscal year ended Jan. 31 with a 10.8% increase to more than $37 billion in net sales of computers and IT products and services, and a big part of that came in the company’s sharpened focus on serving strong demand from business involved in digital transformation projects, CEO Rich Hume says.
“Our worldwide teams executed exceptionally well during fiscal ‘19, capitalizing on a more robust IT demand environment than we anticipated entering the year, driven by a combination of strong economies and employment levels, low interest rates, and the need and desire for businesses of all sizes to transform digitally,” Hume said on a conference call with investment analysts last week, according to a transcript from Seeking Alpha.
He added that Tech Data, which sells to thousands of resellers that sell to businesses, has been developing its multi-part strategy of investing “next-generation” technologies, including a stepped-up focus on providing cloud-based products and services. Since late 2017, for example, Tech Data has been building out its new tech-as-a-service offerings, expanding them last fall to include data center technology and services as well as such products as laptops, mobile devices and related software. The TaaS offerings let customers order online and pay on a consumption basis, paying only for their use of products rather than purchasing the equipment outright.
Tech Data didn’t break out e-commerce revenue, but the company has said in interviews and prior conference calls that more than half of sales are online and over 95% of its inventory is purchased digitally. Using 51% as a minimum percentage for online as a share of total sales, about $19 billion of its fiscal 2018 sales were electronic. Tech Data defines electronic commerce as sales through its e-commerce site, Shop.TechData.com, and through electronic data interchange, or EDI.
For the fourth fiscal quarter ended Jan. 31, 2019, Tech Data reported:
- Total net sales increased 4% year over year to $10.5 billion;
- Net sales in the United States increased 10% to $4.2 billion, or 41% of worldwide sales; net sales in Europe
- remained “essentially flat” at $5.9 billion, or 56% of worldwide sales; net sales in Asia-Pacific increased 8% to
- $0.3 billion, or 3% of worldwide sales;
- Gross profit increased 5.0% to $649.1 million, resulting in a gross profit margin of 6.20%, up from 6.15%;
- Net income of $116.8 million, up from $1.3 million in the year-earlier quarter; the difference was related to changes in U.S. taxes.For the fiscal year ended Jan. 31, Tech Data reported:
- Net sales increased 10.8% year over year to $37.24 billion;
- Gross profit increased 6.6% to $2.26 billion, resulting in a gross profit margin of 6.1%, down from 6.4%;
- Net income of $340.6 million, up from $116.6 million.
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