Q1 Distributor Sales Rise 3.3%

Distributors increased their sales in the first quarter of 2017 by 3.3%, according to new data released today by ASI. The rise in sales isn’t as high as the 3.4% jump recorded in the fourth quarter of 2016, but is up sharply from the 1.4% reported in the first quarter of last year.

“A 3.3% year-over-year growth from existing customers is consistent with what we are finding with our established customer base,” said Brian Abrams, founder and CEO of Corporate Imaging Concepts (CIC, asi/168962).

Abrams says CIC’s sales increased 27% overall for the first quarter, slightly ahead of expectations. “Our fastest area of growth continues to be new clients leveraging our proprietary technology to resolve sophisticated supply chain needs. With two new seven-figure wins in the past month, we anticipate our sales growth to exceed 20% for the balance of the year,” Abrams said.

About 31% of distributors reported an increase in sales in the first quarter, while 21% reported a decrease. Large distributors (with more than $1 million in revenue) increased their sales the most, with 3.6% year-over-year growth for the quarter. Meanwhile, small distributors (with annual sales under $250,000) experienced a bump up in sales of 1.8% compared to the first quarter of 2016. Mid-size distributors (those with between $250,000 and $1 million in sales) posted nearly flat sales.

“Despite the fact that we’re at a 2.5% increase, year-to-date, we’re trending lighter than anticipated,” said Justin MacDonald, general manager of TJM Promos (asi/342485). “So far we’re noticing customers are buying fewer products, but seem to be buying products that cost more. Our increase in sales is mostly due to more apparel orders, which run at a lower margin. We still expect to see growth in 2017 and we have invested in more salespeople to try to get us there.”

The Counselor Confidence Index, which gauges the health and optimism of distributors, reached its highest rating ever at 116 in Q1 of 2017. That’s up from 115 in Q4 2016 and marks three consecutive quarters of growth. “We are up this quarter greater than the 3.3% average. We feel our second quarter will be even stronger with the addition of Coke being added to our roster,” said Steve Friedman, CEO of Top 40 distributor Tangerine Promotions (asi/341609).

The growth of the Counselor Confidence Index reflects a general sense of optimism among distributors as they plan for the remainder of this year and into 2018. More than half of distributors (55%) are predicting a year-over-year increase in sales overall for 2017.