Tiger Direct's parent Systemax Inc. is closing all but three of its 34 retail outlets in the USA, Canada, and Puerto Rico. It will concentrate on B2B sales. The news comes two weeks after Systemax announced that Shark Tank panelist Kevin O'Leary would become its spokesman.
Systemax's retail arm also acquired assets of CompUSA and Circuit City, and incorporated them into the TigerDirect operation. Stores will close by the end of June, including the six Canadian ones in southern Ontario. The three remaining open will be the Miami flagship in its home state of Florida, a distribution centre in Georgia, and a Puerto Rican location. The latter is described as being in a key B2B market.
Last week, while announcing Q4 and 2014 financials, Systemax's Chairman and CEO Richard Leeds said the company would "align our resources solely with a B2B focus." Worldwide B2B sales rose 7% from 2013 to 2014 to US$652.5 million for Q4.
Year over year B2B sales did even better. They were up 9% to US$2.55 billion. By contrast, the year's retail sales were down 11.7% from over US$1 billion to US$891 million. Systemax's Global Industrial unit and other divisions sell IT and other industrial products
TigerDirect employs about 4,000 people. Stores have an average of about 40 personnel. Approximately 1,200 retail staff members will be laid off.
In addition to TigerDirect stores, Systemax has an online presence in TigerDirect.com, TigerDirect.pr, and TigerDirect.ca. It is reckoned to be the 29th largest online vendor in the USA. There are no plans to close the online sales arms of TigerDirect. As reported here in June, TigerDirect started accepting BitCoin for online purchases.
The company has had a chequered past. Numerous lawsuits included Dell accusing TigerDirect of selling outdated and discontinued computer models as new units backed by a Dell warranty. Systemax and TigerDirect paid US$300,000 to settle a State of Florida lawsuit which alleged irregularities in issuing consumer rebates.
Meanwhile, Systemax's new public face is Canadian Shark Tank star Kevin O'Leary. "I'm all about helping businesses increase productivity, and ultimately, cash flow," says the Dragon's Den alumnus. "I'm excited to be working with TigerDirect," he adds, "to do exactly that by providing businesses with the best IT solutions available."
O'Leary has some experience in the gaming software business. With $10,000 borrowed from his mother, he started software publishing company SoftKey. By 1998, after scores of acquisitions, O'Leary was able to sell Softkey, now renamed The Learning Company, to Mattel for US$3.8 billion. The deal was soon called the "most disastrous" acquisition the toy making giant had ever undertaken, and O'Leary and Mattel soon parted.
Two days before the O'Leary appointment, brothers Carl and Gilbert Fiorentino, two of the founders of the company which became TigerDirect, received federal penitentiary terms for fraud while executives at Systemax.
The two cost the company US$27 million more for goods than necessary ruled U.S. District Judge Jose E. Martinez. Found guilty of taking US$9.5 million in kickbacks from one Taiwanese supplier, Carl Fiorentino received over six years in prison. His brother got five years.
Photo: TigerDirect superstore, Markham, ON, courtesy Raysonho @ Open Grid Scheduler / Grid Engine