Shares of MSC Industrial Direct Co. (MSM) plunged 7.23% in Thursday's pre-market trading session following the release of its fiscal 2025 second-quarter results, which revealed declining sales and a cautious outlook for the coming quarter.

The industrial supply distributor reported net sales of $891.7 million for the quarter ended March 1, 2025, representing a 4.7% year-over-year decline and falling short of analyst expectations of $899.5 million. Despite the revenue miss, MSC Industrial's adjusted earnings per share of $0.72 managed to surpass the consensus estimate of $0.68, although it marked a significant 39% decrease from the $1.18 per share reported in the same quarter last year.

Investors were particularly concerned about the company's contracting margins and subdued growth prospects. MSC Industrial's operating margin narrowed to 7.0% from 9.7% in the prior-year quarter, reflecting the challenging operating environment with industrial demand at low levels. Adding to the bearish sentiment, the company provided a cautious outlook for its fiscal third quarter, projecting year-over-year average daily sales growth between -2.0% and 0.0%, signaling ongoing headwinds in the near term.

Erik Gershwind, CEO of MSC Industrial, acknowledged the difficulties faced by the company, stating, "Amid a challenging operating environment with industrial demand at low levels, we generated solid results that landed within our guidance range." He emphasized the company's focus on executing its Mission Critical productivity and growth initiatives to strengthen its market position and achieve long-term objectives.

The sharp stock decline reflects investor concerns about MSC Industrial's ability to navigate the current economic headwinds and return to growth. Market participants will likely keep a close eye on the company's performance in the coming quarters, looking for signs of improvement in sales trends and profitability metrics.