Industry supplier sales rose by 4.7% in the third quarter of 2014, according to data released recently by ASI. The rise in Q3 sales marks the 19th consecutive quarterly jump in supplier revenues. Over the past year, suppliers have averaged quarterly gains of just more than 5%.
“Those numbers are right in line with what we’ve experienced this year, and I believe the gains are due to good corporate earnings and an extended bull market which boosts confidence and loosens the marketing purse,” said Dan Taylor, president of BamBams (asi/38228). “Our booked orders heated up towards the middle of Q3 and our recognized revenue has been catching up, making Q4 look very strong.”
Nearly six in 10 suppliers (57%) reported an increase in year-over-year sales in Q3. About 23% reported lower sales and 20% had no change in third-quarter revenues. Large supplier firms (more than $5 million in annual sales) had a stronger Q3 than smaller firms (less than $5 million), data shows. Large suppliers, on average, reported a third-quarter sales increase of 5.1% versus 1.3% for smaller companies.
Going forward, more than half (56%) of suppliers expect their 2014 full-year sales to be greater than their 2013 total revenues, buoyed by favorable fourth quarter numbers. “We expect about a 7% increase for Q4 year-over-year,” said Alan Vaught, CEO of supplier firm Evans Manufacturing (asi/52840). “We have a stretch plan of 17% for next year, mostly from new product introduction.”
The 4.7% quarterly supplier growth closely follows average Q3 gains among distributors, which tallied 4.6%. Meanwhile, the Counselor Confidence Index, a measure of distributor health, was 112 in Q3 – identical to the six-month rolling average and a dozen points above the baseline that indicates industry growth. – DV