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W.W. Grainger, Chicago, IL, reported sales for the third quarter ended Sept. 30, 2004 were $1.3 billion, up 8 percent versus the prior year's third quarter. Net earnings were up 19 percent to $68 million. Sales for the nine months ended Sept. 30 were $3.8 billion, up 8 percent versus the first nine months of 2003. Net earnings increased 19 percent to $197 million versus $165 million in 2003. Year-to-date operating cash flow of $305 million increased 31 percent over the same 2003 period.
Sales in the Branch-based Distribution segment increased by 9 percent in the 2004 third quarter versus the 2003 quarter. Sales in the U.S. were up 8 percent, due largely to strong sales in the manufacturing and commercial sectors. Sales to government accounts were flat compared to the 2003 third quarter. Sales in the first three markets under the market expansion program (Atlanta, Denver and Seattle) grew by 14 percent in the quarter. Sales processed through grainger.com increased 28 percent in the quarter to $160 million from $125 million in 2003. The quarter also included sales of $12 million related to hurricanes in the Southeast.
Sales in Mexico were up 20 percent in the quarter versus the 2003 period, driven by a strengthening economy and the expansion of two branches. A stronger Canadian economy fueled by its natural resources industry resulted in a 14 percent increase in sales (8 percent in Canadian currency).
Operating earnings for the quarter were up 12 percent, the result of higher sales and improved gross profit margins. Operating expenses rose 14 percent during the quarter affected by increases in variable compensation, benefits and spending for the company's initiatives. This includes two key technology projects; accelerating the implementation of SAP across the enterprise and upgrading the IT infrastructure in the branches.
Lab Safety Supply's sales for the quarter were up 9 percent, the result of both an increase in the number of customer accounts and better customer penetration. Sales were up 2 percent for the quarter for Integrated Supply. Increased sales from 10 new contracts signed since last year's third quarter were partially offset by disengagements of two large customers late in 2003.