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W.W. Grainger Inc., Chicago, IL, reported sales of $6.9 billion for the year ended Dec. 31, 2008, up 7% from 2007. Profit
of $475 million was up 13%.
Grainger reported that it is somewhat below the low end of the range it provided in November for 2009 of -5% and +5%.
In the fourth quarter 2008, sales were $1.6 billion, a decrease of 1% from the 2007 fourth quarter.
Daily sales increased 4% in October, decreased 2% in November and decreased 5% in December. The 1% decline for the quarter included a 2 percentage point decline from foreign exchange, offset by a net 1 percentage point lift from price and volume. Profit in the fourth quarter was $108 million, up 3% versus $104 million in 2007. Included with profit was a $6 million write down of Grainger's investment in a joint venture in India.
Grainger Branch-based Segment
Daily sales in the 2008 fourth quarter for this segment, which includes branch-based businesses in the U.S., Mexico, China and Panama, were flat. Daily sales grew by 5% in October, declined by 2% in November and declined by 5% in December.
During the quarter, the company opened two new full-service branches in the U.S. and closed one storefront location. As part of the market expansion program in Mexico, the company opened two new branches.
As a result of relocating branches under the U.S. market expansion program, the company sold one branch for a gain of $4.6 million in the fourth quarter. For the full year, the company sold seven branches for a gain of $9.7 million. The market expansion program in the U.S. is now complete.
In the U.S., sales in the quarter decreased 1%. The largest declines came from heavy manufacturing, retail and contractors, partially offset by an increase in sales to the government sector.
Market expansion contributed $476 million in incremental sales in 2008 versus $402 million in 2007. Consistent with the overall downturn in the economy, beginning in October most of these markets saw negative sales growth.
Product line expansion contributed about 1 percentage point to the quarterly growth for this segment. Products added over the past three years delivered $687 million in sales in 2008.
Sales in Mexico were down 11% in U.S. dollars for the fourth quarter versus the same period in 2007, but were up 8% in local currency. Sales benefited from Mexico's market expansion program including the seven new branches opened in 2008, but the rate of growth slowed as a result of the weakening U.S. and Mexican economies.
Sales for Grainger's Canadian subsidiary for the quarter were down 6% versus the 2007 fourth quarter in U.S. dollars, up 16% in local currency. On a daily basis, sales in local currency were up 18% in October, 18% in November and 15% in December. Strong sales to agriculture, mining, oil and gas and government customers were partially offset by weakness in the forestry sector.
Lab Safety Supply
Sales for the fourth quarter of 2008 were down 3% versus the 2007 fourth quarter. Daily sales were up 3% in October, down 2% in November and down 11% in December. Sales from the acquisition of Highsmith contributed 9 percentage points to growth in the quarter. Excluding this acquisition, sales were down 12% reflecting continued weakness with Lab Safety's government and manufacturing customers.
W.W. Grainger, Inc. is a broad line supplier of facilities maintenance products.