Dallas computer repair

Byline: Mark Del Franco

The second quarter was a classic "good news, bad news" scenario for the publicly traded business-to-business and computer catalogers tracked by Catalog Age.

Ten of the 14 mailers, or 71%, had increased their year-over-year sales for the quarter. In comparison, just 20% of those tracked last year had managed to increase second-quarter sales.

But on the other side of the ledger, only 50% of the catalogers had improved their bottom line. During the second quarter of 2002, 67% of the catalogers tracked had posted greater profits or less of a loss.

This dark cloud could have a silver lining, though. Jim Adams, managing director of Wellesley, MA-based investment bank Tully & Holland, speculates that the weaker income perfomance "could mean that some of these companies have started growth modes that entail increased prospecting and spending for growth in the near term."

CATALOG AGE SPOTLIGHT ON SECOND-QUARTER SALES

Hefty Improvement for PC Connection

Quarter ended: June 30

The facts: A 10% rise in second-quarter sales helped Merrimack, NH-based PC Connection more than quintuple its income for the quarter. For the three months ended June 30, the computer reseller netted $1.4 million on sales of $321.6 million. For the second quarter of 2002, PC Connection had reported income of $277,000 on sales of $291.2 million. Sales to small and midsize businesses increased nearly 8% - the first time since the fourth quarter of 2000 that sales within the segment increased year-over-year. Second-quarter sales to government and education customers climbed 18%.

The skinny: The cataloger's bottom-line improvement is even more remarkable considering that during the second quarter, PC Connection mailed 49% more catalogs - 7.9 million books compared with 5.3 million last year.

Sport Supply Group No Longer Seeing Red

Quarter ended: June 27

The facts: Despite a 3% decline in sales, Sport Supply Group reversed last year's second-quarter net loss. For the three months ended June 27, the sporting-goods supplier netted more than $115,000 on sales of $26.0 million. Last year, the cataloger had lost $7.2 million on sales of $26.8 million. In a release, president John P. Walker said that results reflected "softness in our resale and dealer revenues." In the meantime, the Dallas-based company, which sells to schools and youth sports organizations, saw the number of orders entered online increase 91% for the quarter, while Web sales increased more than 50% from last year.

The skinny: In April, Sport Supply launched an e-procurement program that enables schools and institutions to buy supplies over the Web. Participating schools are eligible for preferred pricing; for Sport Supply, the program will reduce order processing costs.

CDW Sales Exceed $1.07 Billion

Quarter ended: June 30

The facts: Another quarter, another billion. Even though revenue at CDW increased a scant 2%, the Vernon Hills, IL-based computer reseller still raked in nearly $1.08 billion for the second quarter. Earnings fell 1%, however, to $43.6 million from $44.1 million last year. CDW's selling and administrative expenses as a percentage of sales increased slightly, to 6.4% from 6.1% for the second quarter of 2002. But the added expenses were an investment in the future: They reflected the hiring of more than 100 salespeople. The company increased its sales force by 11%, to 1,367 employees

The skinny: CDW's direct Web sales - those completed on the Internet without the assistance of a service rep - rose 20%, to $242.2 million from $202.1 million for the second quarter of last year.

MSC Industrial's Strong Performance in a Weak Sector

Quarter ended: May 31

The facts: Despite continued weakness in the industrial sector, Melville, NY-based MSC Industrial Direct posted top- and bottom-line gains. Second-quarter net income increased 19%, to $13.2 million from $11.1 million last year. Net sales at the maintenance, repair, and operations (MRO) supplies cataloger increased 3%, to $215.6 million from $208.6 million. While MSC's manufacturing sector revenue was flat, revenue from the nonmanufacturing sector grew 14%.

The skinny: The negative outlook for the marketplace notwithstanding, MSC instituted its first quarterly dividend - a key sign of company health and a boost to investor confidence.

Double-Digit Sales and Earnings Growth at a Healthy Henry Schein

Quarter ended: June 28

The facts: Medical, dental, and veterinary supplier Henry Schein continues to ride the wave of prosperity. Second-quarter net sales at the Melville, NY-based behemoth increased 16%, to $776.2 million from last year's $671.4 million. Net income for the quarter increased 17%, to $32.9 million from $28.1 million. Dental sales increased 8%, medical sales 17%, technology and value-added services sales 20%, and international sales 32%.

The skinny: During the quarter, Schein acquired Hager Dental and Colonial Surgical, which will bolster its European and North American dental businesses.

FINANCIAL REPORT

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