Supplier Sales Increase 7% In Q3
15th Consecutive Quarterly Rise In Sales
Industry supplier sales rose 7% in the third quarter of 2013, a $234 million year-over-year increase, according to new data released today by ASI. The jump in sales marks the fifteenth consecutive quarterly rise in supplier revenues, with Q3 2013 being the strongest period of gains this year. Total supplier sales for the third quarter were approximately $3.6 billion.
“I think the value factor of promotional products in the marketing space has contributed to this growth,” said Dan Taylor, president of BamBams (asi/38228), which has increased its sales by 8.5% this year. “Companies are working hard to expand so there is a need for advertising in the marketplace.”
More than one-half (53.3%) of supplier respondents reported an increase in third-quarter sales – the greatest percentage of suppliers reporting an increase since Q3 of 2012. Smaller suppliers (less than $10 million in annual sales) reported an average increase of 8.5%, with larger firms (more than $10 million) improving revenues by 6.2%. “Our third quarter sales are up 17% and our Q4 is stronger than we have seen in years, causing us to re-forecast our full-year business up,” said Bill Korowitz, CEO of Counselor Top 40 supplier The Magnet Group (asi/68507).
Most suppliers (61.2%) believe their 2013 sales will be greater than their 2012 sales, with larger suppliers generally expressing more optimism. In fact, large suppliers are nearly as optimistic now about sales for 2013 as they were in January, when 78.6% felt their revenues would improve this year. Still, suppliers acknowledge some market challenges remain.
“I think order counts are up and volume is up, but I think the net profits are down,” said Brandon Mackay, president of SnugZ USA (asi/88060). “It’s a challenge to keep net revenue up versus 2007. That said, we’re doing great and we should be able to keep the momentum going throughout the remainder of this year.”
Survey results show that 68.6% of suppliers plan to expand their product lines in 2014, consistent with findings from 2012. Data also shows just over two-thirds (67.4%) of suppliers now have formal testing and inspection procedures, up slightly from 65% in 2012. Nearly nine out of 10 larger suppliers have the procedures, compared to 60.9% of smaller suppliers.
The third quarter marks the first time this year that supplier sales have outpaced distributor sales. Last week, Counselor reported Q3 distributor revenues increased 4.6% year-over-year, following Q2 gains of 5.1%.