Chicago, IL-based Grainger reported sales of $1.8 billion for the second quarter ended June 30, 2008, up 10% over the second quarter 2007. Profit increased 8% to $113 million from the same quarter the prior year.
We are very pleased with the 10% sales growth in the quarter," said Grainger President and CEO James T. Ryan. "We are making market share gains in a slowing economy."
Daily sales increased 13% in April, 7 percent in May and 10% in June. For the quarter, sales were positively affected by price by 2 percentage points, foreign exchange by 1 percentage point, and by the timing of Easter, which also contributed 1 percentage point.
Grainger Branch-based Segment Sales for this segment, which includes branch-based businesses in the U.S., Mexico and China, increased 9% in the 2008 second quarter. Daily sales grew by 11% in April, 6% in May and 10% in June.
Market expansion and product line expansion added 6 percentage points to overall growth in the quarter.
During the quarter, the U.S. branch-based business opened six new branches and closed one branch as well as two will-call express branches. In Mexico, the company opened four full-service branches bringing the total number of branches in the segment to 469.
Sales in the U.S. increased 9%, with growth coming from all customer segments. The strongest growth came from government and large national account customers. Sales growth in the top 25 metro markets outpaced the rest of the U.S.
Product line expansion also contributed to the strong sales performance in the quarter. The company has added more than 100,000 new products to its catalog since 2005. In addition, in 2008 the company has added more than 35,000 products.
Mexico sales were up 25% in the quarter versus the same period in 2007. The business benefited by 5 percentage points due to the timing of the Easter holiday. In local currency, sales increased 20%. The company opened four new branches in the second quarter, with four more branches planned for the second half of 2008.
In China, sales were more than $2 million for the quarter, almost double the sales achieved in the 2008 first quarter.
Operating earnings for the quarter were up 13% in the Grainger branch-based segment. The operating earnings improvements were partially offset by ongoing operating losses in China and incremental expenses in Mexico due to branch expansion.
Acklands-Grainger Sales for the quarter were up 24% versus the 2007 second quarter. Sales growth included a 2 percentage point positive impact due to the timing of Easter. In local currency, sales were up 14%.
On a daily basis, sales in local currency were up 21% in April, 12% in May and 11% in June. Strong sales to mining, oil and government customers were partially offset by weakness in the forestry sector. During the quarter, Acklands added one branch as a result of the Excel Industriel acquisition and closed one branch ending the quarter at 154 branches.
Operating earnings increased 52% for the 2008 second quarter, primarily the result of strong sales and positive expense leverage.
Lab Safety Supply Sales for the second quarter of 2008 were essentially flat versus the 2007 second quarter. Daily sales were up 2% in April, down 1% in May and down 2% in June. Sales from the May 2007 McFeeley's acquisition contributed 2 percentage points to the sales growth for the quarter; excluding the acquisition, the rest of the business was down 2%.
Operating earnings decreased 5 percent for the 2008 second quarter, due to increased operating expenses, which grew at a faster rate than sales.
W.W. Grainger, Inc. with 2007 sales of $6.4 billion is a broad line supplier of facilities maintenance products serving businesses and institutions in the United States, Canada, Mexico and China.