It’s quarterly results time again already and we’ll eagerly be looking for signs of a recovery in the OP sector.
Early results from some of the furniture manufacturers are encouraging, but they are coming off relatively easy comps after the disastrous 2009 for the office furniture sector. All the signs are that the major resellers will once again be struggling to achieve positive like-for-like sales as the jobs market remains depressed.
It’s not all doom and gloom, however. There are reports of some dealers achieving 20-30 percent growth in supposedly shrinking categories such as traditional office products, which shows that the business is out there if you are prepared to go after it.
The recent wave of strikes and protests in Europe over government spending cutbacks has brought the issue of public spending to the fore.
In the UK, the much publicised public spending review by billionaire retailer Sir Philip Green said that billions of pounds could be saved if the government used its purchasing power more efficiently, citing office supplies as one of the areas where substantial savings could be made.
Could we see a return to the old Her Majesty’s Stationery Office (HMSO) setup which was privatised in 1996 and which spawned UK office supplies giant o2o? You never know.
Supplies Network ups the MPS ante
St Louis (MO), USA
North American IT consumables wholesaler Supplies Network says it has ushered in a new era for managed print services (MPS) by teaming up with print knowledge management systems (PKMS) provider Preo Software.
Supplies Network and Preo have entered into a four-year licensing agreement that integrates both companies’ proprietary software and services. It’s a move which Supplies Network believes "broadens MPS from ‘managing printers’ to ‘managing printing’ with invaluable document workflow and employee productivity benefits".
Doug Johnson, Supplies Network SVP-MPS, added: "What the Supplies Network-Preo relationship brings to the market is a new MPS model with the potential to be ubiquitous.
"Supplies Network has invested in the infrastructure and competencies that make entry into MPS simple for others in the channel. We take the risk, while assuring both consistent performance and financials for MPS providers."
Through this partnership, Supplies Network says it is able to deliver a comprehensive MPS solution that is "unparalleled" in the industry. By focusing on the entire print infrastructure, it claims, the economic benefits are much larger than current MPS offerings that address only part of the customer’s problem.
"The next evolution of MPS is now a reality; this partnership has the ability to be a disruptive force in the North American MPS landscape," said Jon Reardon, Group Director of InfoTrends.
Supplies Network’s enhanced MPS services will be rolled out later in the fourth quarter collectively and as individual services.
RED BOX continues on acquisition trail
Leading London independent dealer RED BOX has made its fifth acquisition in the last four years.
The latest deal for RED BOX involves Maidenhead-based firm Solution Centre which provides office supplies, furniture and print to over 500 customers.
"The previous owners Warren Evans and Kevin Lancaster have built a successful business, so this is a great opportunity for both companies and a significant step in our strategy to accelerate growth," said RED BOX Managing Director, Gordon Christiansen.
Solution Centre will continue to operate and service customers from the Maidenhead office. Evans will lead the integration planning while Lancaster will remain client-facing.
Slowly slowly for SPR
Smyrna (GA), USA
Wholesaler SP Richards (SPR) continues to be hit by the challenging employment conditions in the US, with sales for the third quarter down 0.4 percent to $434.5 million.
Business with independent dealers was up in the low single-digits, continuing a very gradual sequential improvement which SPR has seen over the past few quarters. However, this was offset by another double-digit decrease in the major accounts segment.
On the product side, office supplies and technology products had low single-digit decreases, while the cleaning, breakroom and furniture categories continued to show growth, despite Jan/San products comping against the flu-related spike in sales from last year.
Operating profit for the quarter of $26.7 million was flat, which was described as a "good performance" in view of the sales decrease.
Tom Gallagher, CEO of SPR’s parent Genuine Parts, said the wholesaler’s results were in line with expectations, adding that he anticipated sales to turn "modestly positive" in Q4 and to grow in the low single-digits in 2011.
Grainger gaining share
Chicago (IL), USA
Industrial supplies distributor Grainger has posted an impressive Q3.
Total sales for the quarter ended 30 September increased 19 percent to $1.9 billion. Acquisitions accounted for 5 percent of this growth, while currency effects added another 1 percent. That still means impressive organic growth of 13 percent, partly helped by sales of oil spill-related products that added 3 percent to the top line.
Sales in the US segment – which accounts for about 85 percent of the total – increased 13 percent on a comparable basis. Sales by customer end-market, meanwhile can serve as a barometer of economic activity in the US and Grainger says that all segments were up versus the same quarter last year. For example, heavy and light manufacturing were up in the low 20s and low double-digits, respectively, while commercial was up in the mid single-digits.
Company operating earnings of $251 million represented a 30 percent comparable increase on the third quarter last year. This was primarily the result of positive operating leverage from the 19 percent sales growth in the quarter.
The company raised its full-year earnings expectations, driven by better-than-expected organic sales growth and continued cost leverage.
Grainger is known to have shown interest in the San Diego/National IPA cooperative office supplies contract but, as this issue of OPI goes to press, it is not known whether the company submitted a proposal.
Record turnout at TriMega event
Rosemont (IL), USA
TriMega’s recent Aspire 2010 convention in Texas drew record numbers with over 1,000 people in attendance. The convention included TriMega’s largest ever tradeshow floor with over 115 OP suppliers, wholesalers and business partners.
"These are definitely interesting and exciting times in our industry," Charlie Cleary, President of TriMega, commented. "Today, competitive, resilient and fiercely independent dealers are headed on an exciting new venture in partnership with both wholesalers, which have reaffirmed their commitment to the success of independents," he added.
Cleary’s comments were made as he played down suggestions of an alignment between dealer groups and wholesalers in the US.
In his opening address, Cleary frankly spoke about this perceived alignment, saying the real story was in recognising that both wholesalers have stepped up in ways not seen before to the benefit of all independents. He added that TriMega in the future will partner with both United Stationers and SP Richards in creative ways to support TriMega members.
Another hot topic at the event was TriMega’s new national accounts programme, Point Nationwide.
Cleary admitted that some quarters may question the national account selling models which have been developed over the past year for independent dealers, but suggested letting the market decide if the models can be successful.
Preston hails membership after successful BPGI conference
Washington (DC), USA
BPGI CEO Jim Preston has praised the organisation’s membership after October’s annual conference in New York.
66 participants from the 21 members attended the three-day conference and Preston told OPI that he was impressed by the number of candid and positive meetings.
Four guest speakers were invited to give presentations and the main topics covered during the conference were technology, national accounts and supply chain efficiencies.
Following reported tensions within the North American membership last year, there was a much more positive atmosphere this year, and the three North American members – TriMega, is.group and Novexco – have all committed to BPGI for 2011.
"We are still looking at how BPGI will evolve in North America," said Preston, "but like any other organisation you cannot just ignore changing market conditions."
In terms of growing the current membership of the organisation, Preston said that BPGI was exploring three possible additions.
HP names Hurd replacement
Palo Alto (CA), USA
Hewlett-Packard (HP) has named former SAP CEO Léo Apotheker as its new CEO to succeed Mark Hurd who was forced to resign in August.
Apotheker spent more than 20 years at German software giant SAP before stepping down from the CEO role earlier on in the year.
HP also named ex-Oracle COO Ray Lane as its new Non-Executive Chairman, with both appointments effective on 1 November.
The announcement of both Apotheker’s and Lane’s appointments is being seen as heralding a possible shift by the company towards more software-oriented solutions. Software currently accounts for only around 3 percent of HP’s revenues.
WH Smith profit up despite sluggish sales
UK retailer WH Smith has reported a 9 percent increase in underlying pre-tax profits for the year to the end of August despite a slight fall in comparable sales.
Group profit before tax and exceptional items was up 9 percent to £89 million ($143 million), while total sales were down 2 percent to £1.31 billion, with like-for-like (LFL) sales down 4 percent.
High Street sales – where WH Smith operates 573 stores across the country – were down 4 percent at £860 million, a 4 percent LFL decrease, but only 1 percent when excluding sales of entertainment products, a category that WH Smith is dramatically pulling back on as it focuses its offering.
In the stationery category, meanwhile, LFL sales were up 1 percent and gross margin also increased.
The company said that it saw a strong share performance in both general and seasonal stationery. This was driven in part by additional space given to general stationery, while margins were helped by better markdown management of seasonal products post-Christmas.
The category was also boosted by the introduction of educational toys and the re-launch of WH Smith’s online personalised greeting cards offer through the Funky Pigeon brand.
Looking ahead, the company’s main driver of growth and margin is its Travel unit, which includes outlets at airports, railway stations, motorway service stations, hospitals and, more recently, workplaces.
About 50 new outlets at hospitals are planned over the next five years, taking the total number to over 150, while its new workspace channel – with outlets within or just outside large office buildings – is expected to grow to around 50 units over the next five years, up from just eight today.
OPI joins charity climb
OPI is taking part in this year’s Climb of Life charity event with the goal of raising £10,000 ($16,000) for cancer research.
Four members of the OPI team will take part in the Quarter of a Million Foot High Peak Challenge, organised by soon-to-retire Graeme Chapman of dealer group Office Friendly and supported by wholesaler VOW.
The challenge involves the gruelling ascent of ten different peaks in the UK Lake District on 12 November in notoriously unpleasant weather conditions.
OPI has set an ambitious target of raising £10,000 for the Institute of Cancer Research (ICR), a global organisation that is one of the world’s oldest cancer research institutions.
To find out more about this fundraising effort, please visit: www.opi.net/future_events/climb_of_life_2010
BOSS awards 2010 revealed in London
The UK’s BOSS Federation held its tenth annual awards in October at the Lancaster Hotel in London.
More than 500 guests attended the evening, which is regarded as the premier networking event in the UK OP industry.
One of the highlights of the evening was the presentation of the Outstanding Achievement award to Vasanta Group Chairman, Alan Barclay.
Barclay commented: "I am honoured and proud to receive this prestigious award. We live in an age of remarkable and accelerating change which presents greater challenges to business management and serious complications to corporate strategic planning. I hope in my own way I have been able to support the BOSS Federation and the industry through these difficult times."