Grainger – No. 3 on Industrial Distribution's 2014 Big 50 List – reported its sales update for the month of July on Wednesday.
Though the company didn't share dollar amounts per its usual monthly reporting, it said it had a 1 percent sales decline vs. July 2014, which included a negative 4 percentage point impact from currency headwinds, offset by a 1 point gain from acquisitions. Excluding those two factors, organic sales increased 2 percent, driven by 3 percentage points from volume, and offset by a 1 percentage point decline in price.
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Grainger's U.S. sales increased 1 percent, comprised of 1 percentage point from volume and 1 point from sales to Zoro U.S., the company's single channel online business. The sales were offset by a 1 point decline in price.
"Price continues to be pressured by faster growth with lower margin customers," Grainger said in a release.
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By U.S. customer end market, Grainger said:
- Commercial and Retail sales were up in the mid-digits;
- Light Manufacturing and Government sales were up in the low single digits;
- Heavy Manufacturing was down in the low single digits;
- Contractor and Resellers were down in the mid-single digits;
- and - Natural Resources was down in the mid-teens.
"In July, oil prices declined and continued to affect our Natural Resources and Heavy Manufacturing customers," Grainger said. "We estimate direct and indirect exposure to oil and gas represented about a 1 percentage point reduction to U.S. sales in the month. The strength of the U.S. dollar has also been a headwind to exporters, primarily Heavy Manufacturing customers. On the positive side, Commercial customer results were driven by strong, high-single digit growth with healthcare customers."
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Grainger's Canada sales declines 19 percent in U.S. currency and were down 4 percent in local currency. The company said the local currency decline was driven by a 13 percentage point decrease in volume, offset by a 6 point gain from the 2014 WFS acquisition and a 3 point benefit from price. This follows Grainger reporting that its Acklands-Grainger sales declined 9 percent in U.S. dollars during its fiscal second quarter ended June 30.
"Oil prices continued to decline and the Canadian dollar weakened versus the U.S. dollar in the month of July. The combination of these two factors continues to present a significant headwind in Canada," the company said.
Organically, Grainger said declines during July in the Construction, Oil and Gas, Commercial, Heavy Manufacturing, Retail, Transportation and Utilities customer end markets more than offset growth to customers in the Mining, Government, Light Manufacturing and Forestry end markets.
Grainger's 'Other Business' segment increased 8 percent in July, consisting of 25 percentage points from volume and price, offset by a 17-point decrease from foreign exchange. The increase was primarily due to strong revenue growth from Zoro U.S. and Japan. On July 30, Grainger announced its agreement to acquire Cromwell Group (Holdings) Limited, expected to close in early September. Upon closing, results for Cromwell will be reported in Grainger's Other Businesses.
Grainger said sales performance so far in August is consistent with the results for July.
Grainger will report its August sales update on Sept. 14.
