The distributor of office and industrial supplies reports total sales declined in most product categories as restructuring continues.

 

Essendant Inc. reported a slight uptick in online sales in an otherwise dismal first quarter. Overall sales declined thanks to several key factors including ongoing restructuring activities and the loss of janitorial and sanitation supplies customer Office Depot Inc., which began moving to another distributor earlier this year.

Online sales grew 0.5% in the first quarter, chief financial officer Earl Shanks said last week on the company’s quarterly earnings call. But brighter days loom for e-commerce, he said. “Essendant is well-positioned to benefit from the trend of accelerated movement to online sales as our capabilities in distribution position us well for this shift,” Shanks told analysts, according to a transcript of the call from Seeking Alpha. “Sales in our vertical markets channel serving enterprise accounts grew over 15% in the quarter fueled by growth in our government sales.”

Essendant did not break out online sales for the first quarter, but last year it said e-commerce was running about 14% of total sales. At that rate, e-commerce would account for about $175 million for the first quarter.

Essendant 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. Previously announced 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.

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Sales in Essendant’s JanSan business were $334.4 million, down 8.5% from $365.5 million, mainly driven by the loss of the Office Depot business. “From a channel perspective, our sales results reflect the declines in the big-box national retailers and softness in our JanSan distributor channel, as well as declines in the office products independent dealer channel,” Shanks said.

For the first quarter of fiscal 2017 ended March 31, Essendant, No. 113 in the B2B E-Commerce 300, reported:

  • Total sales of $1.269 billion, down 6.2% from $1.353 billion, driven mainly by reduced sales in technology and JanSan product categories.
  • Net loss of $188.6 million, compared with net income of $16.5 million in the same period last year.

Essendant also announced last week that Shanks is retiring and that Janet Zelenka will succeed him as CFO, effective May 26. Zelenka joined Essendant in 2006 and currently is chief information officer. The company’s I.T. department will continue to report to Zelenka when she becomes CFO, the company says.

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