SED International Holdings, Inc. (Amex: SED), a multinational supply chain management provider and distributor of leading computer technology, consumer electronics and small appliances, today announced the launch of its SED Lehrhoff business segment, which includes small appliances, housewares, and personal care products. SED Lehrhoff considerably expands these segments of SED’s business, and over time is expected to increase SED’s sales and profitability.
For approximately $5 million, a discount to the fair value of these assets, SED acquired inventory, intellectual property including customer and vendor records, and a lease option to a distribution center in New Jersey. Lehrhoff & Co., Inc. was an established distributor of small appliances, housewares and personal care that has been in business for over 90 years.
The Lehrhoff business has historically generated annual revenues of more than $40 million. SED has hired key Lehrhoff personnel and is working to restore the highly regarded Lehrhoff enterprise to historical run rates and bolster overall SED profitability. The SED Lehrhoff business segment is expected to contribute modestly to revenue beginning immediately. In association with the SED Lehrhoff business segment, SED expects to incur one-time transaction fees and start-up costs in the first half of fiscal 2012, with meaningful addition to profitability in fiscal 2013.
“The launch of the SED Lehrhoff business segment significantly enhances our small appliances, housewares and personal care business, broadens the scope of our product offering, and is in line with our strategic initiatives to improve our product mix and margins over time,” said Jonathan Elster, President and Chief Executive Officer of SED International. “Moreover, a distribution facility in New Jersey will enable SED to reduce shipping costs and delivery times for clients in the Northeast and Mid-Atlantic regions, providing us with the opportunity to expand our business with existing and prospective clients.“Since these business segments have historically produced more than double SED’s historical margins, it is an area we have been looking to expand in for some time. SED Lehrhoff serves as the base from which we can establish our Company as a competitive player in the small appliances, housewares and personal care distribution industries based on an established, 93 year-old organization that is well respected by manufacturers and customers alike,” Elster concluded.