The 2020 Mid-Year Economic Update_long

MSC CEO Sees Stability as Cause for Optimism

Vending and e-commerce continue to be growth drivers for the distributor.
jenel-white

Manufacturing appears to be stabilizing, which is good news for MSC Industrial Direct (NYSE: MSM). "While not near the strong growth levels indicated by recent ISM readings, feedback from our manufacturing customers confirms the current theme of stabilization and gives us some cause for greater optimism about 2014," CEO Erik Gershwind said in the company's first-quarter investor call.

While historically "stable" wouldn't be a huge focal point for MSC, 2013 proved to be a challenging year for the distributor. "It's not booming; it's not great," Gershwind said. "But it's better than it was for the last 12 to 18 months," particularly in MSC’s core market – metalworking.

Vending and e-commerce continue to be bright spots for MSC and key elements of its growth initiatives. Vending signings exceeded expectations for the quarter, and the company's "vending improvement plan is well underway." Sales through MSC's e-commerce platform reached 46 percent of total sales during the quarter, compared with 42.8 percent a year ago and 45.7 percent in the fiscal 2013 fourth quarter.

Integration of the Barnes Distribution North America business, acquired in April 2013, "continues to go well," Gershwind says. "After many months of decline, revenue growth of BDNA turned positive in the first quarter and remained there in December." MSC has already closed one of BDNA's distribution centers and is in the process of closing two more as part of the integration plan.

Gershwind is positive about the growth opportunities with BDNA, and the company is ramping up investments to capitalize on those opportunities, including plans for adding to the sales force and investing in marketing and expansion of BDNA's service offerings.

Excluding contributions from BDNA, sales for the first quarter ended Nov. 30, 2013, were up 5 percent year-over-year.

The current growth initiatives, however, have MSC slowing in one area: acquisitions. "We continue to see acquisitions as an important element of our growth story over time," Gershwind said. "That said, in the near term we anticipate being even more selective than normal when evaluating potential deals."

About the Author
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

By subscribing, you are agreeing to MDM’s Privacy Policy.
Social Media Auto Publish Powered By : XYZScripts.com