Rexel North America Down More than Market

Rexel’s North American group, which represents 35% of company sales continues to underperform the market.

Some highlights / lowlights from their quarterly report:

• Corporately, organic sales down 4.3% (including negative pricing from copper of .9% worldwide); down 5.6% including currency issues for the quarter.  For the 9 months sales are down 2.1% organically (2.5% with currency included and including a negative 1.1% for copper pricing)
• Globally a gross margin of 23.9%
• US market defined as “challenging”
• North America down 5.8%
  • Oil and gas down 31% in Q3; Canada down only 6%
  • The US us 78% of Rexel North America
    • Sales down 6.6%
      • 2 points of decline attributable to oil / gas in US
      • .6 points of decline to lower cable sales
      • 1.6 points of decline to “branch network optimization” (closures)
    • And, on a twist in terminology, “excluding these unfavorable effects”, sales down 2.4% (but unfortunately can’t be selective in the excluding core aspects of the business.)
    • Platt continues to do well.
  • For Canada
    • Sales down 4%
      • 1.4 points of decline due to 50% drop in the wind business (interesting niche)
• North America gross margin is 22.1%, up 27 basis points
• Expect by the end of the year for the sales decline, globally, to be down no more than 3% with a global EBITDA of between 4.1-4.5%.

It’s obvious that Rexel continues to have challenges.  It’s interesting that when the market was strong they touted their focus on small and medium sized contractors. Now the issue is the industrial market (and they do have a heavy concentration in the Southwest.)  It’s surprising given their density in California, Florida and the acquisition Munro and Platt that they are not doing better in the construction and lighting markets (or maybe they don’t want to mention them?), however, the performance indicates that they are not “flat” or growing in this segment (especially when you consider the Encore and Schneider US results.

What are you seeing in your market regarding Rexel?  Do you consider them a strong competitor in your market or, in the words of some distributors, “your growth opportunity?”  Manufacturers, how are they performing for you and is their approach in the RDCs starting to perform (we hear they are getting better for some regarding POS)?