Net sales rose 2.7% to $854.4 million, driven by growth in sales volume and favorable impacts from acquisitions. This was partially offset by unfavorable changes in product prices and the mix of products sold. Sales were negatively impacted by the pull forward of orders by customers into the first quarter in advance of price increases.
Gross profit inched down 0.2% as the contribution from higher sales volume, realized price increases, and benefits from productivity improvements were offset by both a shift in key customers and changes in sales channel mix as well as higher input costs. Gross margin fell 110 basis points due primarily to a shift in sales among key customers within the retail channel as well as changes in sales channel mix.
The company remained cautiously optimistic for the remainder of fiscal and calendar year 2019 and does not believe that the demand outlook has meaningfully changed from its outlook provided last quarter. Third-party forecasts and leading indicators continued to suggest that the North American lighting market, the company’s primary market, should grow in the low-single-digit range in fiscal 2019.
The shift in sales among key customers within the retail channel could continue to have a dampening effect on gross profit and gross margin, but Acuity Brands expects this to be largely offset by lower freight and commission costs, which are included in SD&A expenses.
Shares of Acuity Brands ended Tuesday’s regular session up 0.19% at $123.89 on the NYSE. Following the earnings release, the stock inched up over 1% in the premarket session.