Grainger Sales Up 8% in 2Q

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July 16, 2007

Grainger Sales Up 8% in 2Q

Grainger, Chicago, IL, reported sales of $1.6 billion for the second quarter ended June 30, 2007, up 8% versus the same period a year ago. Profit was up 12%.

For the six months ended June 30, 2007, sales were $3.1 billion, up 8%, and profit up 15%.

U.S., Mexico

Sales in this segment, which includes branch-based businesses in the U.S., Mexico and China, increased 8% in the second quarter. Of the 8% growth, an estimated 5 percentage points came from the company's two growth initiatives in the U.S., market expansion and product line expansion.

Sales growth was reduced by 1 percentage point due to the continued wind-down of low margin contracts with integrated-supply customers as the company exits the remaining contracts throughout 2007.

During the quarter, the company opened one new full service branch in the U.S. and closed one, keeping the branch count at 430. As part of the expansion program in Mexico, the company opened two new branches. In Shanghai, the company opened two will-call express locations.

Sales in the U.S. increased 8%. The strongest sales growth came from government customers followed by the commercial and reseller markets. Partially offsetting this growth was slower demand coming from retail and heavy manufacturing markets.

Geographically, the Great Plains and Pacific Mountain regions of the country posted strong growth while the west coast and the southeast regions grew at the slowest pace.

Products added in 2006 and 2007 under an aggressive expansion of the company's product lines contributed about 3 percentage points to the segment growth for the quarter. The company has added approximately 60,000 additional products in the plumbing, fastener, material handling and security product lines.

Sales in Mexico were up 26% in the second quarter versus the same period in 2006. In local currency, sales rose 23%. Sales benefited from the ongoing branch expansion program. The company plans to double the number of branches over the next several years, with as many as five more planned for 2007.

Acklands-Grainger
Sales for the quarter were up 8% versus the 2006 second quarter, up 6% in local currency. Acklands-Grainger continued to see strong sales growth across most of the country particularly from the oil and gas and mining sectors. During the quarter, the company did not open or close any branches, ending at 154 branches.

Lab Safety Supply (LSS)

Sales for the second quarter of 2007 were up 7% versus the 2006 second quarter. Sales from recent acquisitions – Professional Inspection Equipment and Construction Book Express in November 2006 and McFeely's in May 2007 – contributed 6 percentage points to the sales growth. Excluding these acquisitions, sales were up in the quarter by 1%.

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