Rexel and Graybar posted Q3 results last week. Interestingly their performance was “comparable”.
- For Q3, the U.S. was up 0.5%, positive for the first time in nine quarters. They’ve closed 25 branches within the past 12 months (7 percent of total branches). These branches represented 3% of sales. Rexel North America is down 4.4% for the first nine months.
- Being down 4.4% through 9/30/10 reinforces Rexel’s focus on the resi / commercial market and that it is losing share to either other national chains or independents. Their performance is further exacberated based upon branch concentrations on the west coast and in Florida.
- We’re also hearing that Rexel would like to increase its industrial business and that initiatives are underway to recruit lines and people.
- Graybar filed a 10-Q last week (yes, they file public documents for a few reasons albeit the stock is not publicly traded). They reported a 7.9% Q3 increase in electrical sales and a 17.6% increase in comm/data. For the nine months through September, Graybar reported an overall increase of 2.4%, however, electrical is down 0.3% and comm/data is up 7.9%. Similar to Rexel, this is due to Graybar’s construction / contractor focus, albeit this is probably more due to their being few significant construction projects. It also explains why Graybar is looking for a number of people to support lighting / energy efficiency, is hiring people for an industrial initiative and is, for the first time according to many people, looking to hire people from outside the company for signficant roles within the organization.
- Graybar’s margins have declined by 0.4%, down to 18.9%. Obviously they are experiencing pricing pressure, most likely from the fact that contractors are requesting more quotes from more distributors for every piece of business.
- Net income through nine months is 1%
What are you hearing of how both companies are trying to “turn it around”?
7 Comments
It’s interesting to note that Graybar’s margins are at 18.9% while Rexel in the US is 21.6%. Is Rexel being more selective in the busienss they take or are they delivering more value?
Rexel’s margins are higher because they “hold back” margins generated on back end supplier deals that goes right to the bottom line. They also make a great deal of margin percentage on the private label line.
Smoke and Mirrors, Smoke and Mirrors. Rexel has a history of creating its own numbers to suit thier own purposes.
Graybar is also much more of a project house, pursues national accounts and has some utility business – all low margin areas
A long term strategy would hire good people in this down economy and leave them in place to take advantage of the ‘someday’ coming upturn but Graybar has always backed off any startup industrial efforts when they don’t have a quick return.
Actually I think that Rexel and Graybar make up their own numbers. Neither are very efficient operations in my market.I wish them nothing but the best and hope they can stay in business in my area. They are really good for my business.
It is interesting to note that Graybar has hired a few people that didn’t have to sweep the warehouse floors first.Or for that matter drive a delivery truck.
Unlike a lot of industries who take government bailouts etc., Graybar responsibly keeps their pention plan funds above 100%… at least if your doing business with Graybar, your not also subsidizing them.
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