Despite concerns from manufacturers and others of inventory depletions within the channel, inventory levels were reported up in every North American region for the fourth consecutive month. Days Sales Outstanding (a measure of how quickly customers pay their bills) saw its best improvement of the year with a 6 percent decrease from the previous month. Distributor productivity reflected by sales per employee backtracked for the second consecutive month continuing to indicate that July and August failed to meet most distributor expectations.
“The economy is in a definitive Phase C (slower growth) trend and so is the average HARDI member, but not without some positives. Looking at the latest data release, the ongoing improvement from 2010 sales numbers is encouraging to see despite its slowing rate. Another promising trend that has developed over the past three months has been the drop in Days Sales Outstanding. The Average Day’s Credit Sales in Accounts Receivable has fallen by an average of around 10 days since June (from 56 days to 46 days). Quicker payment turnaround leads to improved cash flow, something we can all appreciate and should be striving for in a Phase C economic environment,” said HARDI economist Andrew Duguay of the Institute for Trend Research (ITR).
“This might have been our Western region’s best month in about two years in terms of growth rate, and all of North America exceeded my expectation for what I saw as a challenging August,” said Talbot Gee, HARDI executive vice president and COO. “But with impossible fourth quarter comparables to last year’s record months in November and December during the tax credit bubble, August sales up just 7.9 percent should signal distributors and their suppliers to prepare for a potential negative year-end growth rate.”
“Despite eye-popping growth of R-22 unitary sales, overall unitary volumes are failing to keep pace with last year,” said Gee. “I fear we may have underestimated the R-22 impact, but overestimated total unitary volumes for 2011, which is likely to depress distributor sales dollars and margins.”
Publication date: 10/10/2011