Grainger Sales Up 9% in 3Q

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October 15, 2007

Grainger Sales Up 9% in 3Q

Grainger, Chicago, IL, reported sales grew 9% in the third quarter ended Sept. 30, 2007, to $1.9 billion. Net earnings increased 4%.

For the nine months ended Sept. 30, sales were $4.8 billion, up 9% and net earnings were up 11%.

"We are pleased with our solid sales and earnings growth in the quarter. Going forward, we continue to look for ways of improving productivity and efficiency," said CEO Richard L. Keyser. "In the fourth quarter, for example, we have identified up to 125 positions we can eliminate in information technology. As a result, we anticipate … savings of up to $12 million in 2008."

Daily sales improved throughout the quarter versus the prior year: up 7% in July, 9% in August and 11% in September.

Grainger Branch-based Segment

Sales in this segment, which includes branch-based businesses in the U.S., Mexico and China, increased 9% in the third quarter. Daily sales in this segment grew by 6% in July, 9% in August and 11% in September. An estimated 4 percentage points came from the company's two growth initiatives in the U.S., market expansion and product line expansion.

During the quarter, the company opened two new full service branches and two will-call express locations in the U.S. As part of the expansion program in Mexico, the company opened one new branch and one master branch. In China, the company opened two will-call express locations.

Sales in the U.S. increased 9%. The strongest sales growth came from government customers, particularly in September, followed by the commercial and contractor markets. Sales to retail and heavy manufacturing customers grew at a slower rate. Geographically, the Great Plains, South Central and Pacific Northwest regions of the country posted the strongest growth while the West Coast and the Mid-Atlantic regions grew at a slower pace.

Products added in 2006 and 2007 contributed about 3 percentage points to the segment growth for the quarter. The company has added 70,000 products mostly in the plumbing, fastener, material handling and security product lines.

Sales in Mexico were up 24% in the third quarter versus the same period in 2006. Sales benefited from the ongoing branch expansion program. The company plans to double the number of branches over the next several years.

Acklands-Grainger

Sales for the quarter were up 15% versus the 2006 third quarter, up 8% in local currency. On a daily basis, sales in local currency were up 9% in July, 8% in August and 6% in September. Acklands-Grainger continued to achieve strong sales growth from the oil and mining sectors.

Lab Safety Supply

Sales for the third quarter of 2007 were up 6% versus the 2006 third quarter (daily sales were up 8% in July, 7% in August and 4% in September). Sales from recent acquisitions – Professional Inspection Equipment and Construction Book Express in November 2006 and McFeely's in May 2007 – contributed 7 percentage points to the sales growth. Excluding these acquisitions, sales were down by 1% reflecting weakness with manufacturing and government customers.

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