Northamber’s new strategy pays off as firm reports increase in turnover

After making a £1 million loss in 2012/13, distributor Northamber has been on a mission to turn the business around.

In 2014, we spoke to the firm about how it was going to achieve that through embracing emerging categories, strengthening its IT business and hiring experienced staff.

In August 2015, Northamber’s director, Alex Phillips, reiterated that they firm was becoming more flexible, signing more deals and feeling a lot more confident about the year ahead.

The strategy appears to be working as Northamber has just released its financials for the year ended June 30th 2015, revealing an increase in turnover of £2.6m (4.1 per cent) and a £269,000 reduction in the comparative pre-tax loss (from £1,155,000 to £886,000).

With further ongoing actions to refine trading, Northamber was able to increase its gross margin from 6.8 per cent to 7.0 per cent.

So it looks like things are starting to move in the right direction for the 35-year-old distributor.

In chairman David Phillips’ official statement, he revealed that the year to June 30th has been one of ‘contrasting fortunes’, detailing a positive performance in the first half of the year, followed in the second half by events ‘largely beyond or control’.

It seems one of these events was Microsoft’s launch of Windows 10.

“My positive statement at the interim stage, announcing an overall 18.1 per cent sales increase over the equivalent period last year, enabled a relatively confident and buoyant view of the Company’s progress. That was supported by our management accounts showing we had broken back into operating profit in March 2015,” said Phillips.

“At the time, I raised a commercially prudent note of caution and that then proved well founded. On March 19th, and just a week after the interims, Microsoft announced the cancellation of Windows 9 and the proposed ‘summer launch’ of Windows 10 later in 2015, later identified as July 29th.”

Phillips went on to explain how the firm was affected by the removal of support for XP, the criticisms of Windows 8 and the free upgrades to Windows 10, as well as the new operating system’s issues.

“After the earlier removal of support for XP and the criticisms of Windows 8, the resultant uncertainty created within the commercial user sector, running business critical legacy software and peripheral devices, was such that a strong hiatus was created in the otherwise normal anticipated demand run-rates,” he said.

“Whilst seeking to support new product sales during the uncertainty, Microsoft simultaneously announced the offer of free upgrades from Windows 7 and 8 to Windows 10. Commercial users, however, proved understandably reticent to risk any unnecessary data or incompatible hardware or software exposures.”

After the eventual release of Windows 10 and the press reports of discovered problems and awaited fixes, Northamber believes this served to continue the hiatus.

With regards to the future, Phillips commented: “After too many years in this sector, we remain prudently optimistic that we will continue to reverse the trend in the company of the last few years and provide a profitable business for the future.”

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