Grainger posts record sales of $6.4 billion in 2007
-- Industrial Distribution, 1/25/2008 6:06:00 AM
W.W. Grainger Inc. posted record sales of $6.42 billion last year, up 9.1 percent compared with $5.88 billion during 2006.Net earnings for the Lake Forest, Ill.-based broad-line distributor rose 9.6 percent to $420.1 million, compared with $383.4 million during the prior year.
Fourth-quarter sales reached $1.61 billion, up 10.2 percent compared with $1.46 billion during the fourth quarter of 2006. Quarterly net earnings rose 5.5 percent to $104.4 million, compared with $98.9 million during the same period in the prior year.
The company credited its market and product line expansion programs for the increases.
The market expansion program increased sales by as much as 19 percent in some key markets, including Atlanta, Denver and Seattle. All told, the program boosted sales by $402 million last year and reversed Grainger’s operating loss of $8.6 million in 2006: operating earnings were $21.4 million in 2007.
The company added 90,000 products to its line card over the past two years, supplementing its plumbing, fastener, material handling and security product offerings. The expansion boosted quarterly growth for Grainger’s branch-based segment by roughly 3 percent, adding $349 million in sales for the full year.
Sales for the branch-based segment in the United States, Mexico and China rose 9 percent during the fourth quarter, with an estimated 5 percent due to the expansion programs in the United States. Sales growth slowed roughly 1 percent as the company phased out its low-margin integrated supply contracts, the majority of which ended last year.
Grainger opened three new full-service branches and two will-call express locations in the United States during the quarter and closed two full-service branches. In Mexico, the company debuted three new branches. As part of the market expansion program in Mexico, the company opened three new branches. Grainger sold two branches for $1.8 million during the fourth quarter and six branches during the full year, for a total of $6.6 million.
The Acklands-Grainger Canadian division posted a daily sales increase of 23 percent for the quarter on strong sales to oil, mining and government customers. The Canadian segment closed a single branch during the fourth quarter; Acklands-Grainger had 153 branches at the end of 2007.
Sales for the Lab Safety Supply business rose 4 percent during the quarter, including 5 percent from the acquisitions of Professional Inspection Equipment and Construction Book Express in November 2006 and McFeely's Square Drive Screws in May 2007. Excluding those businesses, sales fell 2 percent on weak revenues from government and manufacturing customers.
Grainger spent $647 million buying back 7.1 million shares of its own stock during 2007 and could repurchase up to 4.7 million more shares this year.
Chairman and CEO Richard Keyser said uncertainty about the economy this year is not expected to dim the company’s outlook and reaffirmed Grainger’s projection that earnings per share will increase by as much as 21.5 percent during 2008.
Grainger ranked fourth on INDUSTRIAL DISTRIBUTION’s 2007 Big 50 list of distributors.
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