2. Margins Are Down.
But it hasn’t happened yet. Even as sales were
increasing in last year’s survey, gross margin percentages deteriorated. In fact, PEI members’ 0.9 percent
decline in gross margin was the worst performance
of all the industry segments surveyed. Bates put it
this way: “This re;ects something of a ‘volume at
any price’ mentality that continued despite the
Change in Gross Margin Percentage by Industry Segment
2010 Versus 2009
Change in Gross Margin
Anecdotal conversations with PEI members
over the last few months suggest that the
industry has turned a corner.
6 6 | PEI.ORG | Second Quarter 2012
3. Accounts Receivable
Collections Are Slowing.
Contributing to the problem? The time required to
collect accounts receivable rose by an average of
one day. While less of an increase than that in some
other industries, this is a statistically signi;cant—
and troubling—change. In Bates’ words, this type
of increase shows “something of a ‘don’t make
them mad; help them keep buying’ approach.” Any
customer is better than no customer—even if that
customer is a slow paying one.
Change in Average Collection Period by Industry Segment
2010 Versus 2009
Change in Collection Period (Days)
The data that is soon to be collected will continue
to tell this story. But there is reason for optimism. Anecdotal conversations with PEI members over the last few
months suggest that the industry has turned a corner.
So do other pieces of data from last year’s survey. For
example, while margins had not yet rebounded last year,
the data did show that members were making changes
to cut expenses as a percentage of sales. Inventory turns
also were increasing—always a helpful barometer of how
ef;ciently ;rms are managing costs to produce sales.
Stay tuned! More data to come after the results
from this year’s survey are in.
Rick Long is general manager and associate general
counsel of PEI.