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E-commerce is a bright spot in Q4 for MSC Industrial Supply

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Internet sales neared 60% of total sales for MSC Industrial Supply’s fiscal fourth quarter.

The fiscal fourth quarter wasn’t an easy one for MSC Industrial Supply Co., as a drop in oil prices and a strong U.S. dollar dampened demand from manufacturers for MSC’s business and industrial supplies and caused its total net sales to inch up just one tenth of 1%. “Conditions worsened as the quarter progressed,”president and CEO Erik Gershwind said Monday on an earnings call with stock analysts.

But things were better in MSC’s online business, as e-commerce sales increased a relatively strong 5.7% in the quarter, which ended Aug. 29, to $412.44 million from $390.20 million a year earlier, Gershwind said on the call, according to a transcript provided by Seeking Alpha. As a percentage of total sales, E-commerce increased to 56.7% from 53.7%.

Gershwind said that online sales were also helped by customers purchasing more through MSC’s vending business, which lets companies place online orders for such supplies as drill bits and work gloves that their employees can retrieve from worksite vending machines stocked by MSC. “Vending and e-commerce remain strong, as our customers continue to leverage our technology platforms,” he said on the earnings call.

The company includes in its total e-commerce sales figure sales through its vending business and its web sites, MSCDirect.com and discount site Use-Enco.com; other unnamed web portals; XML-based online ordering systems; and electronic data interchange, or EDI, which uses private networks to exchange invoices and other business documents. MSC sells metalworking services in addition to a wide range of products that companies use in the maintenance, repair and operation of their facilities.

Although it doesn’t break out sales for the e-commerce sites, Gershwind said MSCDirect.com has performed particularly well following investments to that site’s functionality. “We’re really pleased with the performance of the website,” he said, adding: “A lot of the investments that we’ve made into functionality have worked out quite well.”

Gershwind didn’t elaborate on MSCDirect.com’s improvements, but MSC has made several site upgrades over the past year designed to make it easier for customers, including those arriving on its site from Internet searches, to more easily find and purchase products.

Gershwind added in the earnings call that MSC recently added about 150,000 SKUs to its e-commerce site, bringing to about 1 million the number of SKUs it sells online. In addition, MSC said in a 10K financial statement filed with the U.S. Securities and Exchange Commission that it plans to continue expanding and changing its online SKU count in 2016. “Customers continue to drive more of their fulfillment needs electronically,” MSC says in the filing. “To support this trend, we believe that increasing the breadth and depth of our online product offering and removing non-value-added SKUs is critical to our continued success.”

MSC also reported for the fourth quarter ended Aug. 29:

  • E-commerce increased to 56.7% from 53.7% of total sales, which increased only 0.11% to $727.41 million from $726.62 million.
  • Net income of $59.0 million, down 6.1% from $62.8 million a year earlier;

For the full fiscal year, MSC reported:

  • E-commerce sales increased 21.0% to $1.62 billion from $1.34 billion;
  • E-commerce increased to 55.6% from 48.0% of total sales, as total sales increased 4.4% to $2.910 billion from $2.787 billion in the prior year;
  • Net income of $231.31 million, down 2.0% from $236.07 million the prior year.

MSC is No. 97 in the B2B E-Commerce 300, a new ranking of B2B e-commerce companies by annual web sales published by Vertical Web Media, which also publishes B2BecNews, B2BeCommerceWorld.com and the business magazine Internet Retailer.

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