January 11, 2017, 9:48 AM

E-commerce outshines total sales at MSC Industrial Supply

For the fiscal first quarter ended Dec. 3, e-commerce sales rose 1.5% as total sales declined 2.9%. E-commerce sales as a share of total sales, meanwhile, increased to 59.6% from 57.0%, CEO Erik Gershwind says.

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E-commerce continues to lead sales performance at MSC Industrial Supply Co., as it strives to grow out of a downturn in demand.

Despite an uptick in sales in key product categories like machinery and machine tool accessories, which typically increase as customers become more optimistic about their business, total sales for the first fiscal quarter ended Dec. 3 declined 2.9% to $686.27 million from $706.82 million a year earlier, CEO Erik Gershwind said today.

In contrast, e-commerce sales at the distributor of business and industrial products increased 1.5% to $409.02 million in the quarter from $402.89 million in the year-earlier quarter, Gershwind noted on a conference call with stock analysts. E-commerce sales as a share of total sales, meanwhile, increased to 59.6% from 57.0%, he added.

MSC is No. 74 in the B2B E-Commerce 300, which ranks companies that sell primarily to businesses and other large organizations by their annual e-commerce sales.

Gershwind said MSC was “more optimistic” than a couple of months ago that a stronger economy will drive up total sales, noting that the company’s 2.9% decline in total sales was more than a half percentage point better than it had projected. In the meantime, he added, the company is working with suppliers to reduce its own purchasing costs and using technology to make its sales staff more productive. He noted that MSC’s sales staff was “down slightly” to about 2,350, but that it was helping reps spend more “face time” with customers while spending less time on chores like filling out order forms.

Although Gershwind didn’t elaborate on the tools it’s providing sales reps, he noted that MSC is continuing to increase its investments in e-commerce for customer self-service, other digital capabilities, data analytics and inventory management.

MSC added 10,000 SKUs to its inventory in the quarter, bringing the total to more than 1.5 million, Gershwind said. By the end of this year, the company expects to have about 1.6 million, he added.

MSC reported the fiscal first quarter ended Dec. 3:

● Net income of $54.10 million, down 1.7% from $55.03 million in the year-earlier period;

● Gross profit of $308.74 million, down 20.4% from $387.85 million;

● Operating income of $90.60 million, up 0.2% from $90.39 million;

MSC’s formal corporate name is MSC Industrial Direct Co. Inc., but it generally uses the name of its largest division, MSC Industrial Supply Co. The company, a pioneer of B2B e-commerce, won the IR Excellence B2B E-Commerce Player of the Year Award at last year’s Internet Retailer Conference and Exhibition.

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