Chicago, IL-based Grainger (NYSE: GWW) reported third quarter sales of $1.6 billion, which were down
14% versus third quarter 2008. Profit for the quarter increased 3% to $145 million versus $140 million
The 2009 third quarter included a one-time $47 million pre-tax gain from the step-up
of its investment in MonotaRO Co. Ltd., after Grainger became a majority
owner in September.
For the nine months ended Sept. 30, 2009, sales of $4.6
billion were down 13%, 12% on a daily basis, versus the nine months ended Sept. 30, 2008. Profit was
down 9% to $333 million from the prior-year period.
"Despite the effects
of the sluggish economy, we are pleased with our results," said Grainger CEO James T. Ryan. "While
daily sales remain stable, we are not yet seeing a catalyst for a sustained economic turnaround in any of our major end markets.
We expect comparisons to improve as sales fell in the fourth quarter last year. We will continue to focus on what we can control.
With the investments we have made, we remain in a great position as the economy recovers."
Sales for the company decreased 14% for the quarter; down 14% in July, down 13% in August and down 13% in September.
Price contributed a positive 4% while volume was down 17%. Sales were negatively affected by 1% related to foreign exchange.
There were 64 selling days in the quarter, the same as the 2008 third quarter.
the first quarter of 2009, the company has two reportable business segments, the
United States and Canada, which represent 98% of company
sales. This new reporting reflects the integration of Lab Safety Supply with Grainger's U.S. branch-based business. The remaining
operating units (Mexico, India,
Puerto Rico, China,
and Panama) are included in other businesses and are not considered
for the United States segment decreased 14% in the 2009 third quarter.
Sales declined by 14% in July, August and September.
Sales declined in all customer end-markets
in the U.S. Grainger continues to add more products to its offering that will result
in having almost 300,000 products in the 2010 catalog. Product line expansion contributed $251 million in sales
for the third quarter versus $196 million in the third quarter 2008.
earnings for the quarter were down 15% in the U.S. The operating earnings decrease
was the result of operating expenses decreasing at a slower rate than sales, partially offset by a higher gross profit margin.
Payroll-related expenses were down due to lower headcount, reduced commissions and no bonus accruals. Around one third of
the decrease in operating expenses is expected to be permanent. Gross profit margins were up due to sales price increases
exceeding product cost inflation and a $10 million reduction in the LIFO inventory reserve due to lower inflation
on inventory purchases and lower inventory levels than previously estimated.
for the Acklands-Grainger business in the quarter were down 13% versus the 2008 third quarter. In local currency, sales were
down 8%. Sales in local currency declined 10% in July, 5% in August and 9% in September. The Canadian economy remained weak,
particularly the forestry and natural gas industries. Growth in the oil and utilities sectors remained favorable in the quarter.
Operating earnings decreased 41% for the 2009 third quarter (38% in local currency), primarily due
to the sales decline and a 260 basis point decline in gross margin. The decline in gross margin was primarily the result of
higher product costs due to unfavorable foreign exchange rates and an increase in the mix of lower margin business, particularly
Sales for the other businesses, which include Mexico, India, Puerto Rico,
China, and Panama,
were up 11% versus prior year. The sales increase was due primarily to the acquisition of the business in India in June 2009, along with contributions from China
Mexico represents approximately
50% of sales within this group. Sales in Mexico were down 21% in the
quarter versus the same period in 2008 due to unfavorable foreign exchange. In local currency, sales in Mexico increased 2% for the quarter. Operating losses for other businesses were $2 million
for the quarter compared to $3 million a year ago.
W.W. Grainger Inc. with 2008
sales of $6.9 billion is a broad line supplier of facilities maintenance products serving businesses and institutions
in U.S., Canada, Japan, Mexico, India, China and Panama. It has more than 600 branches, 18 distribution centers and multiple Web