Source Interlink Companies Inc. (SORC) Sees Margins Increase in Latest Quarter

The old New England saying - ???you can???t get there from here??? - just cannot apply to most supply chain companies. When it comes to retail sales there has to be product on the shelves in quantities that keep the backroom almost, but not entirely, empty. A company that can manage this feat is in high demand, and is also one that will consistently provide solid profit regardless of market circumstances.

Source Interlink Companies Inc., an entertainment distribution and fulfillment company, works to supply retail merchants with entertainment product at all channel levels. The company???s main product lines include CD???s, DVD???s and single copy sales of periodicals, including wire racks. In a general sense, if a consumer wishes to purchase a CD, DVD or magazine found at a retailer or convenience store, Source Interlink has distributed it to that store and kept inventories at proper levels.

To satisfy customer needs, the company is comprised of three divisions: periodical fulfillment, media, and CD/DVD distribution. Its DVD/CD activities currently represent approximately 5% of all independent distribution activities through the servicing of approximately 30,000 storefronts nationally. Needless to say, the company has an extensive distribution and service operation to fulfill orders and service customers. Annual fulfillment orders in this regard reach 3 million with Amazon, Barnes & Nobel and Store24 being a few of its leading customers.

The company???s strength lies in its adaptability and versatility. Catering to consumer and customer demands on such a large scale requires advanced technology of exceptional ability. The Matrix software used by the company allows supermarket tabloid magazines and associated impulse buy items, which make a checkout point what it is today, to be stocked weekly. Although the company is seeing the effects of a slowing economy in ad revenue at some of its allied operations, its margins have been able to keep pace, growing from just under 3% to 6% in the latest quarter. The economy may affect the company???s bottom line, but when a good story comes across the checkout line, there is a solid source of income to be had and the need to refill the rack.

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