Ingram Micro Sees Growth Slowdown in Q3
Distributor Ingram Micro is the latest channel compaany to report quarterly earnings. While 2Q earnings were strong, thanks to cost-cutting, executives are more cautious moving forward. Sales in North America grew 7 percent last quarter, thanks mainly to an acquisition and Canada, but Latin America was the real success story.
Sales in Latin America grew 28 percent (although they comprise only 5 percent of Ingram Micro's total sales.) Company executive see sales softness around the world. In Q3, sales growth should continue strong in Latin America, but CEO Gregory Spierkel expects sales growth in all other regions to be more modest. The company is focused on cost-containment strategies and continued emphasis on its fee-for-services model. All in all, Spierkel says he remains confident about the state of the company's business and the industry.
To be sure, dstributors like Ingram Micro will face more challenges going forward. It appears the economic weakness in the U.S is slowly spreading to the rest of the world, so the built-in benefit provided by global diversification is likely to be less pronounced for the remainder of the year. It's also tough to predict the future of the U.S. dollar, which has weakened throughout the year (aiding U.S. companies with a strong global presence.) Will this trend continue or reverse? The distribution business is a tough one during the best of times, so as growth slows inside and outside the U.S., well-run companies who can keep a lid on expenses will have the edge.