Avnet, Inc. (NASDAQ:$AVT), the major global electronics and embedded solution distributor, recently said in the company’s Q3 Earnings Call that it has growth plans in store for its UK-based Farnell division.
A Synergistic Cooperation
Farnell represents Avnet’s largest-ever corporate buyout, at about $845 million in October 2016. The company is a high-volume engineering solutions provider in the electronics industry for design, repair, and maintenance; and a natural complement to Avnet’s strong distributor foundation.
In the years since the buyout, Avnet Chief Executive Officer Bill Amelio noted that Farnell has successfully shared leads with Avnet. Farnell has shared “more than 2,000 improved design registration[s] that have been shared with a conversion rate of 67%.”
The two companies have also collaborated on digital transformation, Amelio said, with robotic process design improvement for wide-ranging business disciplines like finance and logistics.
Revamping the Investment
Offsetting the good news of this progress has been Farnell’s lackluster financial performance of late. Amelio said some of this negative performance could be attributed to Brexit, which “represents 20% of our global sales of Farnell.” The other factor affecting Farnell performance is the slowdown currently happening in single-board computers.
Electronics distributors have felt a crunch amid the latest end market consumer demand disruptions. In Asia, for example, Avnet revenues were down both sequentially and year over year. Amelio noted of the region that operations are stabilizing financially, “albeit at a lower level” than in the past.
Avnet plans to re-energize Farnell amid this market-wide slowdown.
The changes all orient around customer experience. First, Amelio said the company is “adding more SKUs and inventory to address customer request.” Another change is that Avnet will introduce new quarterly pricings for Farnell—a move that matches industry-wide price adjustments amid longstanding supply and demand imbalances for goods and talent.
Avnet is also set to revamp its marketing of Farnell on the Internet, including in customer Online searches.
Earlier this year, Avnet announced it would begin accepting cryptocurrency payments from clientele to match customer preferences.