Essendant Prioritizes Private Label - Modern Distribution Management

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Essendant Prioritizes Private Label

Company looks to increase percentage of own brand in sales.

Essendant heads into the remainder of 2017 with a new brand positioning statement and a new focus on its private label offerings, company executives said in this week's earnings call with analysts and also at last month's show for suppliers and customers in Las Vegas, NV.

The company, which rebranded from United Stationers to Essendant two years ago, recently unveiled a new brand positioning statement of "powering possibilities," a tagline CEO Bob Aiken says is centered on helping resellers grow their business.

At the center of this mission is ramping up its offering private label products for resellers, Aiken first told attendees at the Vegas show and then analysts on Monday's earnings call.

"Our merchandising excellence strategies are underway," he said. "The key levers here are driving lower cost of goods and higher penetration of our Essendant brands, or our private label, building a more effective and efficient assortment and aligning with our key supplier partners to drive profitable growth and market share gains across the channels that we serve."

The company expects this shift to "strengthen our overall assortment (and) improve profitability," Aiken said. "But it will also allow us to reduce working capital as we focus in on a tighter assortment."

Essendant is coming off a lackluster but still improved 2016. The company reported sales for 2016 of $5.4 billion, up 0.1 percent from 2015, and a profit of $63.9 million, compared to a loss of $44.3 million in 2015. For the fourth quarter, sales decreased 3.3 percent to $1.3 billion while the company reported a loss of $2.4 million

By prioritizing private label, the company projects those numbers improving steadily in 2017 and beyond. While private label sales are about 15.5 percent of total revenue, Aiken said, some programs are in the "mid-20s, and so there's a lot of runway for us."

"We'll be talking a lot in coming years about how to increase that private label penetration rate and in a way that's a creative to our customers and ultimately to the end users," Aiken said.

Read more about Essendant in the recent MDM Interview, Essendant’s Path Takes New Twist.

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