MSC Industrial Supply Co. (NYSE: MSM), Melville, NY, doesn't hide the fact that it has an aggressive growth plan. In last year's fiscal second quarter earnings call, the industrial distributor laid out its roadmap to becoming a $4 billion company by 2016. But in the short term, the road is not as clear.
The company's fiscal year first-quarter sales were up 5.8 percent year-over-year, a solid gain in a tough market – and one the company's executives say they are pleased with. But that may not help keep the company on track for the needed 15 percent compound annual growth rate to reach its $4 billion goal.
And the outlook for the second quarter isn't that bright either; CFO Jeffrey Kaczka offered guidance that put expected sales growth at the midpoint of 1 percent, based on recent trends.
But despite the murkiness, CEO Erik Gershwind maintains there's reason for optimism. "For one thing, the fiscal cliff has passed, and life has gone on," he said in the first-quarter earnings call with investors. "… And while much work remains to be done on federal spending, at least some uncertainty has diminished."
Another bright spot: e-commerce. Sales attributable to MSC's e-commerce site were 42.8 percent of first-quarter sales, up 50 basis points over last quarter. And the company plans to continue to invest in the platform. "Customers tell us that they find the new site easier to use, fast and more intuitive," Gershwind said. "We see plenty of runway to take this number higher as the new site reaches full adoption in the coming months."