There was a time when the collapse of Misco, after almost 30 years. Would have been almost inconceivable. It its heyday, Misco had revenues over £300 million, operating profits of over £10 million and more than 600 staff. In recent months, the Misco UK name disappeared and a rescue attempt to keep a rationalised business afloat fell through.
Administration was announced just seven months after a new management team headed by Alan Cantwell, backed by Hilco Capital, bought the UK and European business from long-time parent Systemax for £1. Problems besetting the company before the new team took over are being blamed for its demise, rather than any structural weakness in the sector. The problems are believed to be specific to the company.
Mike Norris, Chief Executive of Misco rivals Computacenter plc, said: “We have never been more optimistic about the market’s potential, as customers invest capital, digitalise their businesses and require support to reduce their long-term operating costs. It remains critical that Computacenter invests too, in skills, tools, automation, infrastructure and customer satisfaction as we remain more focused on our long-term performance than the short term. As can be seen from recent results, our investments over the last few years have paid off but they are not guaranteed. However, market opportunity and competition makes this continuous investment both attractive and necessary.”
Misco UK’s operating losses, on the other hand, widened to over £8 million in the year before the change in ownership, Systemax gave up and sold up. Credit insurers began cutting their exposure to Misco and distributors became unwilling to deal with the reseller, with just a few supporting the business until the end. Towards the end, Misco’s Alan Cantwell was rumoured to be trying to raise additional finance. Misco Group’s operations in Spain, the Netherlands, Italy and Sweden are said to be unaffected by the administration.
“As part of efforts to recapitalise the company, the directors initiated a marketing process to protect the UK business as a going concern and engaged in constructive discussions, but once firm offers failed to materialise, the pressure on cash-flow was unsustainable,” Administrators FRP report. “The UK business had moved to a system of supply chain outsourcing of stock, with increasing levels of automation to enable greater efficiencies with suppliers and distributions and overall lower cost, however these efforts came at a time of heightened competition from other globalised online retailers which have eaten heavily into margins of even established resellers like Misco”.