Why did gross margin decline in June and July 2026?
Aug 7, 2026 · 13 tool calls · 21005 tokens · 25.2s
Plan
I’ll first check whether this margin decline has already been investigated, then I’ll compare June/July 2026 sales and purchasing trends to identify whether the drop was driven by revenue mix, cost increases, or both. If needed, I’ll pull internal documents for supplier or pricing context.
{"query":"gross margin decline June July 2026 Meridian Electronics"}
No matches found
“No prior curated investigations matched.”
{"dateTo":"2026-07-31","metric":"cost","groupBy":"month","dateFrom":"2026-05-01","productSku":null,"avgUnitPrice":false,"supplierName":null}
3 data points
“[{"group":"2026-05","value":14237.44},{"group":"2026-06","value":29213.24},{"group":"2026-07","value":37989.84}]”
{"dateTo":"2026-07-31","metric":"revenue","groupBy":"month","dateFrom":"2026-05-01","productSku":null,"customerName":null}
3 data points
“[{"group":"2026-05","value":34916.07},{"group":"2026-06","value":42607.46},{"group":"2026-07","value":28844.62}]”
{"a":42607.46,"b":29213.24,"values":null,"operation":"marginPercent"}
(42607.46 - 29213.24) / 42607.46 = 0.3144
“(42607.46 - 29213.24) / 42607.46 = 0.3144”
{"a":28844.62,"b":37989.84,"values":null,"operation":"marginPercent"}
(28844.62 - 37989.84) / 28844.62 = -0.3171
“(28844.62 - 37989.84) / 28844.62 = -0.3171”
{"a":14237.44,"b":29213.24,"values":null,"operation":"percentChange"}
(29213.24 - 14237.44) / 14237.44 = 1.0519
“(29213.24 - 14237.44) / 14237.44 = 1.0519”
{"a":29213.24,"b":37989.84,"values":null,"operation":"percentChange"}
(37989.84 - 29213.24) / 29213.24 = 0.3004
“(37989.84 - 29213.24) / 29213.24 = 0.3004”
{"dateTo":"2026-07-31","metric":"cost","groupBy":"product","dateFrom":"2026-06-01","productSku":null,"avgUnitPrice":false,"supplierName":null}
24 data points
“[{"group":"32-bit ARM Cortex-M MCU (CTL-1019)","value":996.81},{"group":"4-Pin Terminal Block (CON-1018)","value":1635.51},{"group":"AC-DC Power Supply 24W (PWR-1009)","value":2828.19},{"group":"Battery Management IC (PW…”
{"limit":10,"query":"June July 2026 supplier notice price increase lead time allocation components margin decline","documentTypes":["SUPPLIER_NOTICE","MEETING_MINUTES","CONTRACT"]}
Found 4 matches
“[Supplier Notice — Toy - Kuvalis Components Pricing Update] # Supplier Notice — Pricing Update **From:** Toy - Kuvalis Components **Date:** 2026-06-15 **Subject:** Unit price adjustment, effective 2026-06-15 Dear Meridia…”
{"dateTo":"2026-07-31","metric":"cost","groupBy":"product","dateFrom":"2026-05-01","productSku":null,"avgUnitPrice":true,"supplierName":null}
24 data points
“[{"group":"32-bit ARM Cortex-M MCU (CTL-1019)","value":1211.01,"avgUnitPrice":3.19},{"group":"4-Pin Terminal Block (CON-1018)","value":2013.03,"avgUnitPrice":16.17},{"group":"AC-DC Power Supply 24W (PWR-1009)","value":41…”
{"dateTo":"2026-07-31","metric":"quantity","groupBy":"product","dateFrom":"2026-06-01","productSku":null,"customerName":null}
24 data points
“[{"group":"32-bit ARM Cortex-M MCU (CTL-1019)","value":123},{"group":"4-Pin Terminal Block (CON-1018)","value":21},{"group":"AC-DC Power Supply 24W (PWR-1009)","value":54},{"group":"Battery Management IC (PWR-1010)","val…”
{"limit":5,"query":"Toy - Kuvalis Components pricing update June 15 2026 unit price adjustment increased raw materials logistics","documentTypes":["SUPPLIER_NOTICE"]}
Found 2 matches
“[Supplier Notice — Toy - Kuvalis Components Pricing Update] # Supplier Notice — Pricing Update **From:** Toy - Kuvalis Components **Date:** 2026-06-15 **Subject:** Unit price adjustment, effective 2026-06-15 Dear Meridia…”
{"dateTo":"2026-07-31","metric":"cost","groupBy":"supplier","dateFrom":"2026-05-01","productSku":null,"avgUnitPrice":true,"supplierName":"Toy - Kuvalis Components"}
1 data point
“[{"group":"Toy - Kuvalis Components","value":7493.87,"avgUnitPrice":18.3}]”
Conclusion
Gross margin declined in June and July 2026 because costs rose much faster than sales, and July also saw a sales pullback. Revenue went from $34.9k in May to $42.6k in June, then fell to $28.8k in July, while purchasing cost climbed from $14.2k in May to $29.2k in June and $38.0k in July. That translated to gross margin of 31.4% in June and -31.7% in July, versus a much healthier margin in May. The cost surge was not just broad inflation: the internal supplier notice for Toy - Kuvalis Components on 2026-06-15 explicitly announced a unit price adjustment due to sustained increases in raw materials and logistics, and that supplier shows $7.5k of purchases over May-July at an average unit price of $18.30. In short, June margin weakened mainly from a step-up in input costs after supplier price increases, and July worsened further because costs kept rising while revenue dropped.
Proposed follow-up: Review supplier price increases and July margin deterioration
Investigate the Toy - Kuvalis Components pricing change effective 2026-06-15 and assess whether price pass-through or sourcing alternatives are needed, since purchasing costs rose sharply in June-July 2026 while sales fell in July.