Original Source: https://www.opi.net/news/region/001-north-america/msc-hit-by-impairment-charge-related-to-glove-order/?ct=t(RSS_EMAIL_CAMPAIGN)

North American industrial and MRO reseller MSC took a major hit from a non-delivered nitrile glove order in the first quarter of its 2021 financial year.

While PPE has been a successful category for MSC during the COVID-19 pandemic (see below), the company admitted that sourcing nitrile gloves has been challenging over the past few months. A large order for which it made a prepayment has still not been received, leading to an impairment charge of almost $27 million in its Q1 financial statement.

CEO Erik Gershwind said MSC, like many others, had been using prepayments as a way of securing in-demand products during the coronavirus crisis. With glove supply scarce, MSC turned to new sources of supply in September, making a prepayment to secure priority status. As of 6 January, the order had still not arrived, resulting in the charge. Gershwind said MSC is pursuing all possible paths to either secure the gloves or a refund of its prepayments.

Looking at MSC’s results for the three months to the end of November 2020, the US-based firm achieved sales of $771.9 million, a year-on-year decline of 6.3%. Within this, non-safety and non-janitorial products fell in the low double digits (although this was an improvement on the numbers seen in the company’s fourth quarter), while safety and jan/san items continued to be up more than 20%, driven by MSC’s PPE programme.

The government remains an important customer, with a surge in large safety and janitorial orders in Q1 leading to year-over-year growth of more than 35%. National accounts fell in the low teens and core customers were down in the low double digits.

Q2 got off to a positive start, with total company sales growth estimated at 2.4%. While aided by some large PPE orders, revenue, excluding safety and janitorial, was down in the low single digits year over year.

Melville (NY), USA

https://investor.mscdirect.com/2021-01-06-MSC-Reports-Fiscal-2021-First-Quarter-Results