Grainger COO: February sales slow; meeting with Feds likely
Industrial Distribution staff -- Industrial Distribution, 2/26/2008 6:37:00 AM
James Ryan, president and COO of W.W. Grainger Inc., told analysts at the Reuters Manufacturing Summit in Chicago that the broad-line MRO distributor’s February sales are “softening,” the news service reported.Despite the slowing sales, Ryan said the company is sticking to its full-year outlook.
"February is softening a little bit, but not dramatically. … Our business is still strong," Ryan said, adding that concerns over slowing sales last quarter are "overemphasized."
The Lake Forest, Ill.-based broad-line MRO distributor posted sales of $1.61 billion during the fourth quarter, a 10.2 percent year-over-year increase, but sales grew only 6 percent in December.
That prompted some to worry not only about Grainger’s prospects but the economy’s as a whole, because the breadth of the company’s product offerings and customer base makes it a proxy for the United States economy.
"We are seeing slowing in some geographies," Ryan said at the summit. "2008 is going to be tougher than 2007 for sure, but there are some things we are doing in our business that work even in a down economy."
Sales grew 8 percent in January, in line with Grainger’s forecast of sales growth between 7 percent and 10 percent this year; at the summit, Ryan said it would be "premature" to change that outlook.
In China, the COO said Grainger’s relatively small revenue numbers (nearly almost $3 million last year) are gaining ground and should finish much higher this year. About $1.3 million of total China sales in 2007 came during the fourth quarter, he noted.
"Our growth [in China] picked up more in the second half than it did in the first half," Ryan said. "It's accelerating and we expect it to accelerate."
Grainger expects to meet "within the next month or so." with U.S. Justice Department officials to discuss alleged overcharging of government accounts stemming from a recently unsealed whistleblower lawsuit filed against the company in 2006, he added. The federal government announced earlier this month that it would join the lawsuit.
"There's a difference of opinion somewhere between how we're complying to that contract. We absolutely believe we're in full compliance," Ryan said. "When the Justice Department is ready, we'll sit down with them and talk about where they believe the discrepancies are."
Asked when the meeting would occur, Ryan replied, "probably sometime within the next month or so."
More from the Reuters Manufacturing Summit:
Emerging markets are focus of Reuters Manufacturing Summit
Lincoln Electric CEO hints at more ’08 acquisitions
ITW CEO: Sales from acquisitions could top $1.2 billion this year
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