Grainger Sales Up 11% in 3Q

Chicago, IL-based distributor Grainger reported sales for the quarter ended Sept. 30, 2008, were up 11% to $1.8 billion and 9% on a daily basis from the third quarter 2007. Profit for the quarter increased 28% to $140 million.


Daily sales for the company increased 11% in July, 7% in August and 9% in September. For the quarter, sales were positively affected by price inflation of 4 percentage points and by market expansion and product line expansion, which contributed approximately 3 percentage points of growth. Sales for the quarter were negatively affected by 1 percentage point due to lower sales of seasonal products, while they benefited by 1 percentage point from an acquisition completed in July.

For the nine months ended Sept. 30, 2008, sales of $5.3 billion were up 9%, versus the year-ago period. Profit was up 16% to $367 million.

Grainger Branch-based Segment
Daily sales in the 2008 third quarter, which includes branch-based businesses in the U.S., Mexico, China and Panama, increased 10%, 8% on a daily basis. Daily sales grew by 10% in July, 6% in August and 8% in September. Sales for the quarter were negatively affected by 1 percentage point due to lower sales of seasonal products. The U.S. branch-based business raised prices in August to reflect higher costs from suppliers.

During the quarter, the U.S. branch-based business did not open any new full-service branches, closed three full service branches as a result of relocations under market expansion and closed two will-call express locations. The company opened one full-service branch in Mexico and one in Panama, and closed six will-call expresses in China, bringing the total number of branches in the segment to 460. A will-call express is a non-inventory carrying branch used by customers to pick up products ordered in advance.

Sales in the U.S. branch-based business increased 10%, 8% on a daily basis, with the strongest growth coming from government and national account customers.

Sales growth in certain areas of the country, including Southern California and South Florida, were negatively affected by the local economies. The company expects to see continued incremental sales growth from the market expansion program through 2013.

Product line expansion also contributed to sales performance in the quarter. The company has added about 150,000 new products since 2005.

Sales in Mexico were up 17%, 15% on a daily basis, in the quarter versus the same period in 2007. In local currency, daily sales increased 8%. Stronger sales in natural resources were partially offset by slower sales in the hospitality and manufacturing sectors. The company opened one new branch in the third quarter, with two more branches planned for the fourth quarter.

Acklands-Grainger Branch-based Segment (Canada)
Sales for the quarter were up 17%, 15% on a daily basis, versus the 2007 third quarter. In local currency, daily sales were up 14%. On a daily basis, sales in local currency were up 13% in July, 11% in August and 17% in September. Strong sales to agriculture, mining, oil and gas and government customers were partially offset by weakness in the forestry sector. There was a small effect on sales from foreign exchange in the quarter, unlike what was experienced during the first half of the year. During the quarter, Acklands did not open or close any branches ending the quarter at 154 branches.


Lab Safety Supply (LSS)
Sales for the third quarter of 2008 were up 14%, 13% on a daily basis, versus the 2007 third quarter. Daily sales were up 10% in July, 14% in August and 14% in September. Sales from the July 2008 acquisition of Highsmith, a direct marketing business serving libraries, contributed all of the sales growth for the quarter; excluding the acquisition, the rest of the business was down 5%.

Operating earnings at Lab decreased 14% for

the 2008 third quarter due to lower gross profit margins and operating expenses which grew faster than sales. A negative change in selling price mix and lower gross profit margins at Highsmith contributed to a reduction in Lab's gross profit margins by 1.7 percentage points. One-time integration costs related to the Highsmith acquisition contributed to the growth in Lab's operating expenses.

W.W. Grainger, Inc. is a broad line supplier of facilities maintenance products serving businesses and institutions in the U.S., Canada, Mexico, China and Panama.
" 10/14/2008 8 For first nine months, sales up 9% for Grainger, a facilities maintenance distributor.