Grainger reports record sales in Q3
Industrial Distribution staff -- Industrial Distribution, 10/14/2008 10:12:00 AM
W. W. Grainger Inc. reported record third quarter sales of $1.8 billion, an 11 percent increase over the third quarter of 2007.
Net earnings for the quarter were $140 million, an increase of 28 percent over the $109 million reported last year.
"Our third quarter and year-to-date results are a testimony to [our] strategy and our employees' ability to execute," said James Ryan, Grainger president and CEO. "Going forward, the credit crisis and its effect on the economy create uncertainty. … [However], with our strong performance this quarter, we are raising our earnings per share guidance this year to $6 to $6.20 from $5.80 to $6.10.”
Grainger said daily sales for its branch-based segment in the United States increased 10 percent, with the strongest growth coming from government and national account customers. In Mexico, China, Panama and the U.S. combined, business also increased 10 percent.
Daily sales for the branch-based segment increased 8 percent. Daily sales grew by 10 percent in July and 6 percent in August.
Sales for the quarter were negatively affected by approximately one percentage point due to lower sales of seasonal products. The U.S. branch-based business raised prices in August to reflect higher costs from suppliers.
During the quarter, the U.S. branch-based business did not open any new full service branches, closed three full service branches as a result of relocations under market expansion and closed two will-call express locations.
The company opened one full service branch in Mexico and one in Panama, and closed six will-call expresses in China, bringing the total number of branches in the segment to 460.
Market expansion is targeted for completion in 2008, with only four projects remaining in the top 25 metro markets.
Sales growth in certain areas of the country, including Southern California and South Florida, were negatively affected by the local economies. The company expects to see continued incremental sales growth from the market expansion program through 2013.
The company said product line expansion also contributed to the strong sales performance in the quarter. Grainger has added approximately 150,000 new products since 2005.
Sales in Mexico were up 17 percent, 15 percent on a daily basis, in the quarter versus the same period in 2007. Stronger sales in natural resources were partially offset by slower sales in the hospitality and manufacturing sectors. Grainger opened one new branch in the third quarter, with two more branches planned for the fourth quarter.
The Acklands-Grainger Canada division had a 17 percent increase over the third quarter of ’07. Sales were strong in the agriculture, mining, oil and gas, and government segments, the company reported.
Sales for Grainger’s Lab Safety Supply division were up 14 percent versus the 2007 third quarter. Grainger said the sales from its July 2008 acquisition of Highsmith, a direct marketing business serving libraries, contributed all of the sales growth for the quarter.
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