Like most businesses, distributors were hit hard by COVID-19 and the economic devastation that ensued. But the industry proved its resilience in the third quarter and set in motion a V-shaped (or mostly V-shaped) recovery.
Distributors, as a whole, posted average revenue of -3.2% in 3Q (July through September) compared with the year-ago quarter. The decline was 80 basis points above the forecasted revenue dip in the quarter and about 260 bps below 1Q, the last pre-pandemic quarter (though even the tail end of that period was affected).
The improvement from 2Q to 3Q hinged on distributors adapting to lockdowns and quarantines and finding ways to do business safely, according to Dave Manthey of Baird, the bank that has partnered with MDM on quarterly industry reports since 2008.
“The second quarter was really tough,” Manthey says. “Offices were closed, manufacturing facilities were shut down, commercial construction job sites were shuttered. We saw the aggregate revenue down about 10% in the second quarter, across all of the distribution categories combined. In the third quarter, every category improved. Many of them still negative, but one of these ‘less bad’ situations. That was driven by offices starting to open and people starting to go back to work.”
Manthey and his colleague, Quinn Fredrickson, broke down more of the 3Q results in a recent video interview with MDM CEO Tom Gale. Click below to watch the 16-minute clip:
For much more on how the industry navigated the pandemic in the third quarter, read the MDM Premium article, Is the V-Shaped Recovery for Real? The report includes detailed analysis of how distribution categories performed in 3Q plus industry projections for 4Q, 2021 and beyond.
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