Distributors increased their sales in the second quarter of 2017 by 3.2%, according to new data released today by ASI. The rise in Q2 sales is slightly lower than the 3.3% jump recorded in the first quarter of 2017, but mirrors gains in the second quarter of last year.
“We actually did very well in Q2 when compared to last year. We were up 59.5%,” says Chris Ferriter, VP of business development at SoBe Promos (asi/245603). “We expect to finish a solid 40%–50% up on last year’s numbers and are gearing up for a monstrous final five months of the year.”
About 28% of distributors reported an increase in sales in the second quarter, while 18% reported a decrease. Large distributors (with more than $1 million in revenue) increased their sales the most, with 3.9% year-over-year growth, on average, for the quarter. Meanwhile, small distributors (with annual sales under $250,000) experienced a bump up in sales of 1.3% and mid-size distributors (those with between $250,000 and $1 million in sales) posted nearly flat sales, year-over-year.
“We continue to see consolidation in both the distributor and supplier side of our business and I expect that smaller firms will continue having trouble competing,” says Mitch Mounger, CEO of Top 40 distributor Sunrise Identity (asi/339206). Mounger says his company experienced double-digit growth in the quarter and expects similar success through the remainder of the year.
Michael Levitt, president of MRL Promotions (asi/258137), says that 2017 is a transitional year. “For Q2, we’re up 28.3% compared to 2016, and up 59.6% compared to Q1 of 2017,” Levitt says. “We are on track to be up this year, so it will be interesting to see how Q3 closes out and how Q4 concludes.”
The Counselor Confidence Index, which gauges the health and optimism of distributors, dropped to a rating of 113 in Q2 of 2017. That’s down from 116 in Q1, ending a growth streak of three consecutive quarters. The downturn of the Counselor Confidence Index reflects a sense of concern among distributors as they plan for the remainder of this year and into 2018. Fewer than half of distributors (45%) are predicting a year-over-year increase in sales overall for 2017.
There are distributors, though, that are bucking the trend. “I’m actually shocked to hear fewer distributors expect 2017 sales to be up,” Ferriter says. “We’ve been seeing a nice surge from most of our clients across the board and have been adding new clients at a solid clip.”