Sales across several industries scored well in the second fiscal quarter ended March 3 for MSC Industrial Supply Co. “Automotive, aerospace, heavy manufacturing and agriculture were all areas of strength,” CEO Erik Gershwind said on a conference call with stock analysts this week.
And helping to drive overall sales was customers’ rising use of e-commerce channels, as internet-backed purchasing accounted for 60.3% of sales. That was only barely up from 59.8% a year earlier, but it shows a continuing rise in MSC’s customers’ preferences for using e-commerce.
As a result, growth in e-commerce sales edged out growth in overall sales. E-commerce sales increased 10.2% to $463.70 million, as total sales rose 9.3% to $768.99 million. Gershwind says MSC counts among e-commerce sales all forms of “automated selling,” including its internet-connected vending machines located at customer sites as well as orders placed via EDI and its e-commerce site, MSCDirect.com.
“Product sales that go through our vendor managed inventory solutions and our vending machines account for slightly less than half of total e-commerce sales,” Gershwind said on the call with analysts, according to a transcript from Seeking Alpha. MSC sells a wide range of maintenance, repair and operations, or MRO, products that companies use to operate their facilities. It also specializes in selling metal-cutting tools used in manufacturing. At the end of the second quarter, it operated with “just over” 1.6 million SKUs.
In late January, MSC implemented a “moderate” price increase that “yielded some benefit” in second-quarter revenue, Gershwind said. He added during the conference call with analysts that, though MSC routinely monitors its competitors’ pricing, it bases its prices mostly on how its suppliers set their pricing.
For the second quarter ended March 3, MSC reported:
- E-commerce sales increased 10.2% to $463.70 million from $420.86 million a year earlier;
- Total sales rose 9.3% to $768.99 million from $703.78 million;
- Gross profit amounted to $337.22 million, up 7.2% from $314.56 million;
- Net income of $117.55 million, up more than 100% from $53.56 million. The large swing in net income was largely related to a change in income tax.
For the six months ended March 3, MSC reported:
- Total sales increased 10.8% to $1.54 billion from $1.39 billion;
- Gross profit of $672.29 million, up 7.9% from $623.30 million;
- Net income of $177.14 million, up 64.2% from $107.85 million.
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