Grainger 2Q sales up 5 percent
Grainger reported second-quarter sales were $2.5 billion, a 5 percent increase compared to $2.4 billion in the 2013 second quarter.
Net earnings for the quarter decreased 5 percent to $206 million versus $218 million in 2013. Earnings per share of $2.94 decreased 3 percent versus $3.03 in 2013.
During the quarter, the company recorded a $10 million after-tax charge related to changes to its employee retirement plan in Europe.
"We continue to be pleased with the performance of our U.S. business, including our three most recent acquisitions. The investments we are making in growth and infrastructure continue to drive share gain, particularly among our large, more complex customers who have fully embraced our value proposition," said chairman, president and chief executive officer Jim Ryan. "We are also seeing strong growth from our single-channel businesses, which are meeting the less complex needs of smaller customers in Japan and the United States," Ryan added.
Ryan added that sluggish performance elsewhere dampened results.
During the quarter, the company decided to extend its U.S. ERP system across North America as opposed to the previous plan to run two separate ERP systems, resulting in a write-off of $7 million of software development costs.
United States
Sales for the United States segment increased 7 percent in the quarter versus the prior year. Sales growth to customers in the heavy and light manufacturing, retail, natural resources and commercial customer end markets contributed to the increase.
Operating earnings for the United States segment increased 8 percent in the quarter driven by the 7 percent sales growth and positive operating expense leverage, partially offset by lower gross profit margins. Operating expenses increased 3 percent, including $19 million in incremental growth-related spending and the incremental expenses from the acquired businesses.
Canada
Sales in the second quarter in Canada decreased 9 percent in U.S. dollars versus the prior year and were down 3 percent in local currency.Lower sales to the construction, mining, oil and gas, government, light manufacturing and reseller customer end markets more than offset growth to customers in the commercial, forestry, utilities, transportation, heavy manufacturing and retail end markets.
Operating earnings in Canada declined 48 percent in the 2014 second quarter and were down 45 percent in local currency. The earnings decrease was primarily driven by lower sales, a lower gross profit margin and negative operating expense leverage. The increase in operating expenses was primarily driven by higher IT expenses along with some non-recurring costs.
Other Businesses
Sales for the Other Businesses increased 14 percent for the 2014 second quarter versus the prior year. The sales increase was primarily due to strong revenue growth from Zoro and the business in Japan, which more than offset modest sales declines in Europe and Latin America.
Operating earnings for the Other Businesses were roughly breakeven in the 2014 second quarter versus $13 million in the 2013 second quarter.
Year-to-Date
For the first six months of the year, sales of $4.9 billion increased 5 percent versus $4.7 billion in 2013. Net earnings decreased 2 percent to $423 million versus $429 million in the first half of 2013.
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