MSC Industrial Direct Company Inc (MSM)
Gross profit margin
| Sep 2, 2023 | Sep 3, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Gross profit | US$ in thousands | 1,642,960 | 1,558,250 | 1,333,520 | 1,343,320 | 1,432,040 |
| Revenue | US$ in thousands | 3,986,180 | 3,683,500 | 3,228,150 | 3,174,920 | 3,363,820 |
| Gross profit margin | 41.22% | 42.30% | 41.31% | 42.31% | 42.57% |
September 2, 2023 calculation
Gross profit margin = Gross profit ÷ Revenue
= $1,642,960K ÷ $3,986,180K
= 41.22%
The gross profit margin is a key financial ratio that measures the percentage of revenue retained after accounting for the cost of goods sold. It indicates the efficiency of a company's production and pricing strategies. Analyzing the gross profit margin of MSC Industrial Direct Co., Inc. over the past five years provides insights into the company's ability to manage production costs and maintain profitability.
From the data provided, we observe a declining trend in MSC Industrial Direct Co., Inc.'s gross profit margin over the five-year period. The gross profit margin decreased from 42.57% in 2019 to 40.98% in 2023. This declining trend suggests that the company may be facing challenges related to controlling the cost of goods sold or pricing its products effectively.
A lower gross profit margin can stem from various factors such as increasing production costs, pricing pressure from competitors, or an inability to pass on cost increases to customers. It may also indicate inefficiencies in inventory management or operational processes.
It is essential for MSC Industrial Direct Co., Inc. to delve deeper into the components of the cost of goods sold to pinpoint the factors contributing to the declining gross profit margin. Additionally, the company may need to reevaluate its pricing strategies and cost containment measures to improve its gross profit margin and overall profitability.
In conclusion, the declining trend in MSC Industrial Direct Co., Inc.'s gross profit margin warrants a thorough investigation into the underlying drivers of this trend. Identifying and addressing the factors impacting the gross profit margin is crucial for enhancing the company's financial performance and sustaining its competitive position in the industry.
Peer comparison
Sep 2, 2023