The fiscal third quarter for MSC Industrial Supply Co. is one period the distributor of industrial supplies and metal-working parts is glad to see finished.
For the third quarter ended June 1, MSC reported a decrease in sales of 7.1% to $974.4 million compared with the third quarter of fiscal 2023. Net income was $71.7 million compared with $95.2 million in the prior year.
MSC Industrial ecommerce sales
MSC Industrial didn’t break out ecommerce sales for the most recent quarter. However, in the second quarter, MSC’s ecommerce sales — including sales made through EDI systems, VMI systems, extensible markup language ordering-based systems, vending, hosted systems and other electronic portals — represented 63.2% of net sales.
It’s been a tough year so far for MSC. Struggles can be attributed to two factors, MSC Industrial CEO Erik Gershwind told analysts on an earnings call, according to a transcript from SeekingAlpha.com. First, there were fewer sales from its core group of metal-working customers. Also, the company experienced delays in launching time-critical improvements to its digital commerce platform,
“During our preliminary results release, we described that our biggest disappointment impacting this fiscal year’s results has been re-energizing our core customers due in large part to delays in our website improvements,” he told analysts. “We also experienced some unexpected gross margin pressure in our fiscal third quarter following the full rollout of web price realignment.”
The delayed website enhancements were designed to foster ecommerce with MSC’s core manufacturing customer base. Nevertheless, they resulted in setbacks in marketing efforts and online features for helping those customers find the right products at the right price, the company says.
MSC Industrial website updates
MSC expects to begin realizing more website improvements in its current fiscal fourth quarter. In addition, it expects to complete the projects in the “early stages” of fiscal 2025, which begins this September.
The delay in ecommerce technology upgrades eventually led to an executive departure. MSC’s chief digital officer, John Hill, left the company last month.
Gershwind wants to expedite a return to better sales and profits. To do that, he said he is taking a more direct hand in speeding up ecommerce updates.
“With respect to MSCDirect.com, the recent executive changes have given me a chance to get even closer to our team and to our development efforts,” he told analysts.
MSC expects to have most of all the updates complete by the second quarter of fiscal 2025, the company says.
“We’ve implemented twice-per-week executive reviews; these reviews are bringing more transparency, collaboration, and energy to the program,” he said. “We expect to deliver enhancements to search and product discovery beginning this month. These include improvements to search accuracy and relevance and the introduction of a new presentation of results, which will begin with a narrow slice of our product offering and a rollout on a broader scale in the upcoming quarters.”
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