Avnet says that growth at Farnell is being challenged by Brexit and a slowdown in sales of single-board computers. Third quarter results showed Farnell sales down 6% year on year to $367.5m from $391m, and flat sequentially.
Avnet CEO Bill Amelio commented, “Brexit is clearly impacting investing and purchase decisions in the UK. This represents 20% of our global sales of Farnell. The second factor is the slowdown in sales of single-board computers which continues to be a headwind. We expect it to remain to the current quarter, but anticipate this to reverse itself starting the September quarter.”
On a conference call to analysts hosted by seekingalpha.com Amelio outlined plans to improve Farnell’s growth.
He said strategic investments would be made in adding more SKUs and inventory to address customer request.
“Next, we’re introducing new quarterly pricings within Farnell that will be positive first in Avnet. This will greatly improve the customer experience and efficiency. We’re also investing in digital infrastructure to improve web speed and customer experience. Lastly, we’re making targeted marketing investments in search and pay per click to improve awareness in search results,” Amelio told analysts.
“We’re in the process of putting new warehousing space in place, and the construction’s finished, and we will be in a process of ramping that up at the end of the year. It’s going to take some time. We got to fit it out, of course, put the conveyors in, etc. That will allow us to expand pretty significantly.”
“We expect these investments to have meaningful positive impact on Farnell’s business and put it on a path to outgrow the industry. One last comment on Farnell. The lead-sharing program between Avnet and Farnell is going very well. We now have over 2,000 improved design registration that have been shared with a conversion rate of 67%. This progress demonstrates the customer and lifetime value benefits of bringing a catalogue distributor, together with a high-volume solutions provider,” he added.
Amelio also explained two examples of the company’s digital transformation progress.
“First is something we call My Digital Assistant. This provides a product recommendation to our sales team from system-generated insights from both internal and external recommender engine. This enables our sales team to quickly and efficiently discover new sales opportunities at our cusp. This tool is currently in product phase in Europe with wider deployment schedules later this calendar year,” said Amelio.
“The next example, he coninuued, is the deployment of robotic process automation where we are leveraging the spectrum of intelligent technology to automate repetitive tasks in areas, such as supply chain, finance, IT and logistics. This improves productivity by eliminating mundane and repetitive tasks that improves quality and customer experience. In the first year of adoption, we’re well under way to exceed our aggressive goals.”