Q2 Distributor Sales Increase 6.1%
18th Consecutive Quarterly Gains
Data released by ASI today shows that distributor sales grew by 6.1% in the second quarter of 2014, continuing a stretch of 18 consecutive quarterly gains. Meanwhile, the Counselor Confidence Index, a measure of distributor health, hit 113 in Q2 – just off last quarter’s record number – and well above the baseline that indicates industry growth.
“It seems that businesses overall are bullish about the future and spending money,” said Greg Muzzillo, founder of Top 40 firm Proforma (asi/300094). “We were up over 10% in the quarter and we expect to finish the year up over 10% as well.”
More than half (57%) of distributors reported a year-over-year rise in second-quarter sales, the highest percentage of growing firms in two years. Small distributor firms (less than $250,000 in annual revenues) reported an average sales increase of 4.3%, an improvement from 2.4% in Q1. Mid-sized distributors ($250,000 to $1 million) averaged 3.6% growth, while large firms (more than $1 million) fared the best in Q2, recording a 7.8% sales rise, on average.
“Our second quarter was quite consistent with the industry average,” said Dave Thompson, president of Top 40 distributor National Pen (asi/281040). “We believe growth is being driven by improved employment and a slight improvement in overall optimism.”
Distributors remain bullish about their overall sales for 2014, with 69% expecting an increase in revenues over last year. Eight in 10 large distributors are projecting a sales rise, with two-thirds of mid-sized and small companies also predicting a revenue jump. “We’re anticipating 15% year-over-year growth,” said Jason Black, CEO of Top 40 distributor Boundless Network (asi/143717). “As for the industry going forward, I think margins will get tighter across the board, small distributors will continue to be scrappy, and larger distributors without technology or a strong value proposition will lose market share.”