CDW (CDW, Financial) detracted from performance during the quarter as the Company's gross profit slightly declined. Many of CDW's larger customers (by employee base) saw a slowdown in near-term spending as they navigated the banking turmoil earlier this year, in addition to digesting purchases made during the pandemic "omni-office" boom. CDW organizes itself across several end-markets, with each of these end markets at different stages of building out their omni-office presences. In the meantime, the post-pandemic IT environment has quickly evolved from supply scarcity (due to vendor shortages and strong demand) where CDW flexed its balance sheet to ensure inventory availability, to more recently helping customers manage never before seen levels of complexity related to a work-from-everywhere workforce. CDW's outstanding returns on capital, cheap multiple, and mission-critical functions it offers to vendors and customers continue to be an attractive risk-reward for portfolios.
From David Rolfe (Trades, Portfolio)'s Wedgewood Partners second-quarter 2023 letter.
