Although ecommerce sales took an unusual dip in MSC’s fiscal third quarter, the company sees its ecommerce channels increasing in importance in how it will bring value and service to customers, CEO Erik Gershwind said today.

MSC Industrial Supply Co., a major distributor of metalworking and other industrial supplies, is working through market changes brought on by the COVID-19 pandemic, which led to an unusual 11.4% year-over-year decline in ecommerce sales for its fiscal quarter ended May 30.

Ecommerce will likely grow beyond 60% of total sales.
Erik Gershwind, president and CEO
MSC Industrial Supply Co.

The decline, reversing the year-to-year increases MSC has typically recorded in recent years, was “primarily related to the higher volume of safety and janitorial products not transacting through our ecommerce platforms,” MSC says in a document it made available today.

The Q3 decline in ecommerce sales follows a second-quarter year-to-year ecommerce decline of 3.6% and a slack first quarter. In prior quarterly and annual financial statements, MSC has routinely reported steady increases in ecommerce sales that have surpassed its increases in total sales. MSC defines as ecommerce sales processed through its flagship website, MSCDirect.com, its internet-connected vending machines and electronic data interchange.

Ecommerce backs ‘mission-critical’ services

President and CEO Erik Gershwind, on a Q3 earnings call with investment analysts today, said that MSC’s tradition of providing its customers with “mission-critical” assistance in running their factory floors and other operations will not change in a post-COVID world. What will change, he added, is “how we deliver that value proposition” to customers.

He then noted that MSC will increase its reliance on ecommerce and other digital technologies to serve customers with products and services, including the metalworking expertise it provides to customers in such industries as aerospace and automotive manufacturing.

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Noting that ecommerce is generally more than 60% of MSC’s total sales, Gershwind said “that number is likely to grow, and we will continue investing there.”

He added that other digital technologies, including online “face-time” communications, will continue to play more important roles in helping MSC’s metalworking experts, for example, share their expertise with customers.

For the fiscal third quarter ended May 30, MSC reported:

  • Ecommerce sales fell 11.4% year-over-year to $461.3 million, accounting for 55.2% of total sales, as total sales fell 3.6% to $834.97 million;
  • Gross profit fell 4.0% to $353.96 million, resulting in a gross profit margin of 42.4%, down slightly from 42.5%;

For the nine months ended May 30, MSC reported:

  • Ecommerce sales declined by 7.4% year-over-year to $1.44 billion, accounting for 59.0% of total sales, as total sales dipped 3% to $2.44 billion;
  • Net income declined by 1.8% to $78.11 million.

MSC’s formal corporate name is MSC Industrial Direct Co. Inc., but it generally goes by MSC Industrial Supply Co., the name of its primarily business unit.

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