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Sales in the branch-based distribution segment were flat versus the prior year third quarter. The sluggish economy and weak sales of seasonal products contributed to a sales decline of 1 percent in the U.S. Overall performance in this segment benefited from incremental spending by government accounts and approximately $2.5 million of sales related to Hurricane Isabel. Sales processed through grainger.com increased 13 percent to $125 million from $110 million in the 2002 third quarter.
Sales in Canada were up 9 percent for the quarter due to the effect of a favorable Canadian exchange rate. In local currency, this business experienced a 4 percent sales decrease. Operating earnings for this segment declined 1 percent versus the 2002 third quarter. Increased operating expenses related to the logistics network project and higher health care costs contributed to the decline in earnings.
Sales for Lab Safety Supply increased 6 percent. Excluding revenues from the Gempler's business acquired on Apr. 14, 2003, sales were down 3 percent. These results reflect ongoing weakness in the manufacturing sector, which represents approximately half of Lab Safety's sales. Operating earnings of $11 million for this segment were down 19 percent, due primarily to increases in catalog media expense and integration costs associated with the Gempler's acquisition.
Sales for Grainger Integrated Supply were down 12 percent during the quarter due to fewer customer locations and lower sales to existing customers. Operating earnings for this segment were $0.7 million versus $1.7 million in the 2002 third quarter, due to lower fee revenue and higher operating expenses primarily related to a systems upgrade.