First-quarter sales growth was slower than expected, according to respondents to the first-quarter 2014 MDM-Baird Distribution Survey. On average, overall growth was 2.2 percent; fourth-quarter respondents forecast growth of 4.3 percent for the first quarter.
PVF-water & sewer companies were once again the strongest segment in the survey, with revenue gains of 8.1 percent. Safety companies and HVAC companies reported solid revenue growth of 6.9 percent and 5.6 percent, respectively.
Two sectors reported revenue declines in the first quarter, led by fasteners companies (down 1.1 percent). The roofing supplies sector also saw revenue decline on average 0.6 percent, but optimism increased about the summer selling season with pent-up demand from a long winter.
While the unexpectedly harsh winter conditions dampened first-quarter results across sectors, 89 percent of respondents said that other underlying business trends were stable or accelerating.
Gross margins were up overall, rising 60 basis points on average.
For the second quarter, respondents expect an average revenue increase of 4.1 percent. PVF-water & sewer once again expects to see the highest gains in the second quarter. Respondents in the segment forecast average growth of 7.8 percent for the quarter. Respondents in safety and plumbing were the least optimistic about growth in the second quarter, forecasting growth of 1.4 percent and 1.5 percent, respectively.
More than a third of respondents (39 percent) expect to increase inventory levels in the second quarter, with only 15 percent expecting to decrease levels. The remaining respondents (46 percent) expect to maintain current levels. During the first quarter, 37 percent decreased inventory levels, while 21 percent increased inventory, in line with expectations from the fourth-quarter survey.
Thank you to all who participated in this quarter’s survey!
The quarterly survey with Robert W. Baird & Co. included about 500 respondents in distribution (70 percent of respondents) and manufacturing in diverse sectors. The survey's goal is to gauge business trends and the outlook for the industry.
Read more about the results of the first-quarter 2014 survey, including results by sub-sector, in the April 25, 2014, issue of MDM Premium.
