Essendant Inc. reported small declines in online and overall sales for the fiscal 2016 fourth quarter as the distributor of office and industrial supplies continues efforts to streamline operations and balance the loss of several major clients in its janitorial, food service and breakroom supplies, or JanSan, products segment.

“Our actions are centered upon driving merchandising excellence through better sourcing and assortment and stronger alignment of our pricing with cost-to-serve,” Essendant CEO Robert Aiken Jr. said in a statement this week. “We are also intensely focused on winning back lost revenue in the JanSan distributor channel, diversifying and growing our industrial channel, driving productivity and cost reductions, and further reducing our working capital.”

On the company’s year-end earnings call with analysts, Aiken said Essendant continues its efforts to improve revenue that he outlined in the third quarter. Steps include expanding online sales and government sales, improving merchandising and product pricing, building up its private-label products, reducing operating costs, and expanding its offering of next-day shipments and drop-shipping to end-customers.

While Essendant expects sales to improve in 2017, any growth will be tempered by the loss of two key accounts, Aiken said on the earnings call, according to a transcript provided by Seeking Alpha. Online sales will increase across its multiple product categories, including janitorial and sanitation, industrial and automotive.

Two conditions will largely offset expected gains, however, beginning with Office Depot Inc. moving to another distributor for its janitorial and sanitation supplies in early 2017, Aiken said. And Staples Inc.’s Q4 acquisition of Daytona Beach, Fla.-based Capital Office Products will hurt 2017 sales as well. “Capital was one of our larger independent dealer customers,” Aiken said. “As a result we expect full-year 2017 revenue to be flat to down 4%.” Essendant expects to make up for revenue from those lost customers in 2018, he added.

Essendant reported Q4 online sales declined 2.8%, which was largely driven by one unnamed customer, chief financial officer Earl Shanks said on the earnings call. “That customer’s in the midst of a thorough review of its overall assortment which in turn is impacting our sales. Excluding the impact of this one customer our e-tail channel grew by 2.2% over the prior year.”

The company did not disclose Q4 or full-year e-commerce sales.

For the year ended Dec. 31, Essendant reported:

• Total net sales were flat at $5.369 billion, compared with $5.363 billion in fiscal 2015.
• Gross profit declined 9.2% to $759.9 million from $836.5 million.
• Net income of $63.85 million, compared with a net loss of $44.3 million in the prior year.

For the fourth quarter ended Dec. 31, it reported:

• Total net sales decreased 3.3% to $1.254 billion from $1.297 billion a year earlier.
• Gross profit fell 17.8% to $165.1 million from $200.8 million.
• Net loss of $2.35 million compared with a net loss of $95.8 million in the same period last year.

Essendant is No. 113 in the B2B E-Commerce 300.

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