Printer Friendly

First Quarter Supplier Revenues Drop 21 Percent
Volume 608
May 12, 2009


ASI's first-ever exclusive survey of ad specialty suppliers was released today, revealing that the group as a whole showed a 21.1% year-over-year decline in the first quarter of 2009. The total translates into a decrease of $551 million, with over 60% of suppliers reporting decreases compared to 21% that reported an increase. "In general the number sounds reasonable in terms of what we're hearing from other suppliers," says David Nicholson, president of Counselor Top 40 supplier Leed's (asi/66887), on the 21.1% Q1 decrease. Another leading industry supplier, however, counters that other companies are actually underestimating the losses they are reporting. "I think that companies, and it's just human nature, tend to embellish when they're doing well, and also embellish when they're not doing as well," says the executive, who requested anonymity.

The survey revealed that larger suppliers (with revenues of more than $10 million) are faring better than smaller suppliers. Half of large suppliers reported decreases compared to two-thirds of small suppliers, and over 30% of large suppliers reported increases compared to less than 20% of small suppliers. "I would imagine that it is [because of] reliability, that [distributors] want to stick with the larger suppliers," says Jeff Lederer, executive vice president of Top 40 supplier Prime Line (asi/79530). "They're more worried about the smaller suppliers, price hunter suppliers that are only about price. The reliability of that is in question because you don't want to work with someone who is only selling on price, who hasn't invested the money in quality products."

ASI's first quarter sales data report of distributors, released in April, showed a 17.6% decline. Nicholson theorizes that the difference could come from "any purchases that are going outside the traditional supply channel you're surveying. It could impact that in terms of the difference between distributor numbers and supplier numbers."

Top suppliers have little expectations of a recovery, neither in the second quarter nor through the rest of the year. Survey respondents echoed that sentiment, with 59% predicting that sales in 2009 will be lower than in 2008 (though larger suppliers again were more optimistic, with 19% fewer large suppliers expecting decreases for the year). Suppliers do stress, however, that results should improve later this year. "I think the fourth quarter will be closer to even for the industry because we've already seen the decrease as an industry starting in October," Lederer says. "We've already had one cycle, so I don't think you'll see the same decreases on top of [those losses]."

Sponsored By: