3M total sales drop 20% in May

After 3M emerged in the spotlight for its N95 masks amid the coronaries pandemic, the company's total sales fell 20% in May. Yahoo Finance's Emily McCormick joins The First Trade to discuss.

Video Transcript

ALEXIS CHRISTOFOROUS: Want to check in with Emily McCormick now, because we have got some earnings out from a blue chip company, 3M. That's the company behind those N95 masks. And they said that overall sales in May fell 20% from this time last year. Emily, what else can you tell us about that report?

EMILY MCCORMICK: Well, Alexis, we did get a very weak mid-quarter update from 3M for the month of May. As you mentioned, overall sales were down by a 1/5 over last year to $2.2 billion for the month. And that extended to [INAUDIBLE] lines that we saw in April for 3M when they saw an overall sales decline of 11%.

Now, taking a look by segment. We saw health care sales down 11%. Consumer sales down 12%. Safety and industrial sales down 17%. And transportation and electronics, the laggard here, with a sales decline of 28%.

Now, one thing to really note here is that safety and industrial is that business unit that includes sales of N95 masks and other personal protective equipment. That unit did post a sales decline in May. Now, 3M didn't break out PPE sales specifically, but the overall drop here in that unit does suggest either a drop in demand for that equipment or a steeper drop off in sales of other products in that category that outweighed any gains.

And the other thing I want to flag here is that health care sales also turned negative in May. That had been the only unit to grow sales over last year in April. Now, again, 3M didn't provide any details as to why that was the case for the month. So, that will be something to watch when the company reports earnings at the end of July.

And then finally, I do want to also note that 3M flagged the fact that May did have two fewer business days than last year. So, that also contributed to the steeper sales decline [INAUDIBLE] in May as compared to what we saw in April. And taking a look at that stock now, it is off just over 2.8% in early trading and adding to those year to date declines we've seen for 3M. Alexis.

BRIAN SOZZI: Emily, you cover a lot of companies here closely. Is it one of the takeaways from this 3M report that, yeah, you know what, the US economy is not bouncing back perhaps as quickly as the stock market would suggest?

EMILY MCCORMICK: Well, that's definitely one potential takeaway to have here. But if you look at 3M overall, it is one of these companies that people tend to look to as a manufacturing bellwether, as a company that touches a number of different business segments. I mean, if you think about health care, for example, 3M had flagged in the first quarter that elective surgeries were down. So, that was something, sort of a broader macroeconomic or a broader economic trend to think about in the US.

So, interesting to see that that had actually been positive in April, that health care segment. And then turning that around in May, it does beg the question of what's actually going on in health care? What does it mean for other health care equipment companies? So, just kind of one example of things that you can-- trends you can start to pick up looking at companies, like 3M, and sort of their individual business segments.

And then just looking geographically too. We saw Asia-Pacific sales for 3M were down 15% in May. And if we think about some of these other companies, they did start to flag a pickup in sales in the Asia-Pacific region because the coronavirus pandemic can hit those areas first, and they've started to see a bit of a pickup. But this actually is a bit more of a gloomy signal that we're getting from 3M. So, just interesting on that to see what this company flagged versus what other companies have also seen as the second quarter is underway.

ALEXIS CHRISTOFOROUS: All right. Emily McCormick, thanks for the update on 3M.