October 2008

Extra

Second-Quarter Sales Up

ASI’s Quarterly Sales Survey, released in mid-July, reveals that second-quarter industry sales increased by 3.7%, compared with sales from the same time period in 2007. The percentage is equal to a $190 million increase, using to the 2007 industry revenue number of $19.6 billion as a basis. The second-quarter sales increase follows a 3.4% jump in first-quarter sales.

Despite the increases this year, though, the second-quarter survey found that distributors have a slightly more worried view of the industry than in the first quarter. The number of distributors that reported sales increases for the second quarter dropped six percentage points to 41%, marking the fourth consecutive quarterly decline.

Iowa-based Newton Manufacturing Co. (asi/283300) is reporting flat sales for the second quarter, but doesn’t see any fear in the eyes of buyers. The company attributes its stagnant sales to Mother Nature, namely the recent floods experienced by the state. That said, they aren’t blind to the larger economic issues.

“Gasoline prices aren’t a help, by any means, but I would hesitate to say that that’s chocked off any of the business,” says Jerome Hoxton, president. “The challenging economy is affecting certain sales areas and business segments, but others are picking up and, most important, our customers are not wringing their hands. We have a lot of work in-house right now, so I’m looking forward to a good third and fourth quarter.”

Joy Smith, owner of Joy of Advertising (asi/237605), categorizes her distributorship as a small business on the national level, but mid to large for the Albuquerque area where she is based. Her revenues are up 11% for the second quarter, which she attributes to proactive measures.

“When economists tell us that we are in a slumping market, we don’t sit back and wait for the phone to ring,” she says. “I think our sales will remain strong, and I have every indication that we are going to go out with a bang at the end of the year.”

In California, where gas prices at presstime were approaching $5 a gallon, business has remained on a part with last year’s second quarter, says Memo Kahan, president of PromoShop (asi/300446). He has noticed one big difference this year: “Our orders are way up, but we have definitely noticed that the order size is dropping,” he says. “We are still ahead of last year but are working harder.”

Still, Kahan remains confident that conservative buyers will change their tune as the end of the year approaches. “Businesses still need to advertise and are watching their spending right now, but believe me, the remainder of their budgets will be spent during that last quarter.”