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Posted April 16, 2015

Grainger Q1 sales up 2 percent

Grainger reported sales for the first quarter of 2015 increased 2 percent to $2.43 billion, compared to $2.38 billion in the first quarter of 2014.


Net earnings for the quarter declined 3 percent to $211 million versus $217 million in 2014. Earnings per share of $3.07 were flat versus 2014.

"This was a challenging quarter. Our results were affected by continued headwinds from the strong U.S. dollar and weakness in the oil and gas sector in North America. We remain encouraged by the growth achieved with large customers in our U.S. multichannel business and the customer acquisition strategy that is fueling our single channel online businesses," said chairman, president and chief executive officer Jim Ryan. 

The company also announced plans to permanently change its capital structure by taking on debt and buying back $3 billion in stock over the next three years. Grainger expects to buy back an incremental $1 billion of stock in 2015, beyond the $400 million previously announced. The company also plans to add approximately 400 new sales representatives in 2015, double the original number announced in late 2014. To reflect these changes and the expectation of slower macroeconomic growth, Grainger updated its 2015 guidance. The company now expects 1 to 4 percent sales growth and earnings per share of $12.25 to $12.95. The company's previous 2015 guidance included 3 to 7 percent sales growth and earnings per share of $12.60 to $13.60.

Results for the quarter included a 1 percentage point increase from acquisitions and a 3 percentage points reduction from foreign exchange. Excluding acquisitions and foreign exchange, organic sales increased 4 percent driven exclusively by volume growth.

United States
Sales for the U.S. segment increased 4 percent in the 2015 first quarter versus the prior year, driven by 2 percentage points from volume, 1 percentage point from sales of Ebola related safety products and 1 percentage point from increased sales to Zoro, the single channel online business in the United States. Sales to customers in the Commercial, Light Manufacturing, Retail, Government and Heavy Manufacturing customer end markets contributed to the sales increase in the quarter.

Canada
First quarter 2015 sales for Acklands-Grainger decreased 8 percent in U.S. dollars but were up 3 percent in local currency. The 3 percent sales increase in local currency consisted of 7 percentage points from WFS Enterprises Inc. (WFS) acquired on Sept. 2, 2014, and 2 percentage points from price. This growth was partially offset by a 5 percentage points decline in volume and a 1 percentage point decline from lower sales of seasonal products. The 5 percent decline in volume was driven by lower sales to the Oil and Gas, Construction, Reseller, Commercial, Retail and Heavy Manufacturing customer end markets, partially offset by growth to customers in the Utilities, Light Manufacturing, Transportation, Forestry, Mining and Government customer end markets. 

Other Businesses
Sales for the Other Businesses increased 8 percent, 21 percent in local currency, for the 2015 first quarter versus the prior year. This performance consisted of 21 percentage points of growth from volume and price, partially offset by a 13 percentage points decline from foreign exchange. Local currency sales growth in the Other Businesses was driven by the single channel online businesses in the United States and Japan, and the multichannel business in Mexico.

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