The effects of the coronavirus and the changes in supply and demand for safety and janitorial products have continued to disrupt distribution markets into May.
A case in point is MSC Industrial Supply Co., the multibillion-dollar distributor of metalworking and industrial maintenance, repair and operations (MRO) products, which reported year-over-year net sales declines of 10.5% fiscal April and 7.8% for the fiscal 2-month March-April period that ended May 2. In a press release and statement filed today with the U.S. Securities and Exchange Commission, MSC attributed the declines partly to a “significant decline versus the prior year” in April sales of products outside of its safety and janitorial categories.
Gap between orders and invoices
At the same time, MSC reported that order volume increased through fiscal March and April “at a double-digit pace over the prior-year period due to the continuing surge in large safety and janitorial orders, scarcity of product and longer lead times.”
It also noted, however, that MSC experienced “an unusually large gap between bookings (or orders) and what was invoiced in fiscal March 2020,” and it added: “This trend continued through fiscal April 2020.” As a result, MSC’s order backlog for the 2-month period “increased substantially versus the prior-year period and is well above $100 million.”
MSC said it anticipates that many of these bookings will get invoiced in fiscal May and the fourth quarter, which begins in June.
‘Solid gross margins’
On a positive note, MSC said it “has seen solid gross margins through fiscal March and fiscal April on the “strong realization of its mid-year price increase” and as a result of initiatives it carried out with its suppliers earlier in its current fiscal year, which began in September 2019.
“The company intends to continue reporting monthly sales trends until the heightened uncertainty caused by COVID-19 diminishes,” MSC said.
MSC didn’t break out ecommerce sales for fiscal and March and April. For the second quarter ended Feb. 29, it said ecommerce sales declined by 3.1% to $478.7 million, as total sales decreased 4.5% to $786.1 million.
Ecommerce sales, including sales through MSCDirect.com, internet-connected vending machines, vendor-managed inventory services and electronic data interchange, hit an annualized run rate of $1.97 billion during the fiscal second quarter, down 1.5% from a year-earlier annualized figure of $2.0 billion, according to figures provided by MSC.
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