Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you update us on the pricing actions mentioned earlier, specifically the expected price range in High-Touch this year and any gross margin implications?
A: (Donald G. Macpherson - Chairman & CEO) Inflation has been stickier than expected, leading to a revised inflation expectation from 0% to 1% to now 1% to 2%. We are a bit late in adjusting prices this year, so corrective actions are being taken with a new pricing cycle starting May 1. Despite these challenges, our volume growth remains strong.
Q: Any updates on the Endless Assortment segment, particularly the B2C portion, and expectations for its performance improvement?
A: (Donald G. Macpherson - Chairman & CEO) No changes to the current guidance of 7% to 10% constant currency growth. B2C and B2C-light customer segments are expected to continue facing headwinds through the second quarter but should improve as the year progresses.
Q: How does the depreciation of the yen impact MonotaRO's margins, considering a significant portion of their COGS is in yen?
A: (Deidra Cheeks Merriwether - CFO & Senior VP) Most of MonotaRO's COGS are in yen, with a smaller portion in U.S. dollars. They've managed to pass on inflation through price adjustments effectively. The $0.13 EPS impact from the yen depreciation covers both transactional and translational effects.
Q: Could you provide more details on the investments being made in marketing and other growth engines?
A: (Donald G. Macpherson - Chairman & CEO) Investments are planned and consistent, focusing on supply chain enhancements, technology, and marketing across various channels. These investments are evaluated regularly for returns and are part of our normal expenditure.
Q: What are the dynamics in the utility and commercial services verticals, especially with utilities experiencing a downturn?
A: (Donald G. Macpherson - Chairman & CEO) The downturn in utilities is largely due to issues with a single customer rather than a sector-wide trend. Our exposure to utilities isn't extensive enough to significantly impact overall sector performance.
Q: How are you managing SG&A expenses, especially with the potential need to adjust investment spending based on growth outcomes?
A: (Donald G. Macpherson - Chairman & CEO) We focus on productivity improvements across the business and maintain investments in demand-generating activities regardless of economic conditions, aiming to drive long-term growth and maintain market competitiveness.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
