Promogram

Distributor Sales Hit Record High In 2017

Industry distributors grew annual sales by 3.2% in 2017, resulting in a record $23.6 billion in total revenues, according to new data released by ASI. The gains mark the eighth consecutive year of overall growth and would likely have been stronger if not for a challenging Q3 that included a series of devastating hurricanes. Q4 of 2017 featured a strong rebound, as distributor sales improved by 3.5, the largest quarterly increase in two years. Additionally, the Counselor Confidence Index, which measures the health of distributor companies, improved in Q4 2017 to 114, from 111 in the previous quarter.

>>Counselor Breaking News Podcast: 2017 Industry Sales Report

“In Q3, two of the three biggest states for promotional products, Texas and Florida, were hit by disasters that crippled much of their respective economies,” said Nate Kucsma, ASI’s executive director of research. “This resulted in a quarterly growth rate that was the second worst since the great recession. However, the promo market bounced back nicely in Q4. While not fully making up for what was lost, the fourth quarter provided a strong finish to 2017 and is fueling optimism for 2018.”

More than one-third (35%) of distributors reported an increase in sales for Q4 2017 versus Q4 2016, and 42% reported a revenue uptick for all of 2017 when compared to the prior year. The ASI study also found that more large distributors (greater than $1 million in annual revenue) than small firms ($250,000 in revenue or less) enjoyed Q4 gains. About 55% of large distributors reported a Q4 sales increase compared to only 30% of small distributors. Nearly 60% of large distributors reported a revenue uptick for all of 2017 compared to only 38% of small distributors.

Marc Simon, CEO of Top 40 distributor HALO Branded Solutions (asi/356000), told Counselor the reported gains are in line with what he’s hearing. “I was at a dinner at the Expo this week with several distributors, and we went around the room and speculated about industry growth. Most attendees suggested a 3% to 4% growth rate, so 3.2% is certainly in the ballpark and not a surprise,” Simon said. “HALO’s sales numbers exceeded the 3.2% that ASI’s data shows.”

Bret Bonnet, president of Quality Logo Products (asi/302967), said his company’s growth was especially strong in 2017. Taking into account the entire year aside from December, Bonnet reported a 9.3% increase in sales and 14.5% increase in the number of orders invoiced. “For QLP, 2017 was no doubt a banner year,” Bonnet said. “We’re forecasting double-digit gains for 2018 as well.”

Boost Promotions (asi/142942) enjoyed similar success last year. “We had a great 2017 and increased in all areas – revenue, profit margins and number of new clients,” said Chris Faris, the firm’s president and CEO. “Boost’s 2017 sales were up 21% from 2016.”