It was a mixed third quarter for industrial supplies distributor Global Industrial Co.
Barry Litwin, CEO, Global Industrial Co.
Total sales for the quarter ended Sept. 30 fell slightly while the company continued to wrestle with ongoing supply chain issues, CEO Barry Litwin told analysts on a third-quarter earnings call.
But sales for the first nine months of the year are up, and Global Industrial’s launch of more private label products is paying off, he said. “We have seen continued growth in our Global Industrial and other private branded products, which deliver a high quality and an attractively priced offering to customers, as well as driving a higher composite gross margin,” Litwin told analysts.
For the third quarter, net sales declined 3% to $277.4 million from $285.7 million in the third quarter of 2020. Net income was $23.2 million compared with $24.1 million in the third quarter of 2020. And gross profit margin reached 36.8%, up from 35.8% a year earlier.
“Continued constraints within the supply chain contributed to a significant increase in open orders, which negatively impacted top-line results in two ways,” Litwin told analysts. “Due to delays in order fulfillment times, our conversion of customer demand in net sales was much slower than our typical conversion cycle—we believe that the combination of both extended lead times, as well as the volatility of in-stock positions of key products, cause customers to defer buying decisions and limited our ability to maximize sales.”
Tex Clark, chief financial officer, Global Industrial Co.
While not breaking out many specifics such as the total amount of private label sales, the push to develop and sell more private label brands is paying off, the company says. “We saw a continued growth in core product lines, and our private label offering once again increased as a percentage of total sales,” chief financial officer Tex Clark told analysts.
For the first nine months of the year, net sales increased 6.1% to $801.1 million from $755.1 million for January through September in 2020. Net income was $49.8 million compared with $47.7 million in the first nine months of 2020.
Despite holding its own so far this year, supply chain disruption and related issues continue to hamstring operations, the company says. “Due to the supply chain environment, we experienced extended fulfillment times and continued to see an elevated number of open orders for both stock and drop-shipped products,” Clark said. But he added that the company was cautiously expecting “that the supply chain will normalize over the next six months.”
Ecommerce now accounts for about 55% of total orders, the company says. Using that as a metric Digital Commerce 360 estimates that Q3 online sales were about $152.4 million in the third quarter and about $440.6 million for the first nine months of the year.
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