Grainger First-Quarter Sales Up 1.4% - Modern Distribution Management

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Grainger First-Quarter Sales Up 1.4%

Distributor to accelerate pricing realignment to attract new customers faster.

Chicago, IL -based Grainger (NYSE: GWW) reported first-quarter sales of $2.5 billion, an increase of 1.4 percent compared to the prior-year quarter. Profit decreased 6.4 percent to $175.7 million.

The sales increase was driven by a 5 percentage point increase from volume growth, partially offset by a 3 percentage point decline in price and a 1 percentage point decline from lower sales of seasonal products.

Company operating earnings of $295 million for the 2017 first quarter declined 7 percent versus $317 million in the 2016 quarter. The decline was driven primarily by lower gross profit from the strategic pricing initiatives in the United States.

"Overall, the first quarter clearly fell short of our expectations, driven primarily by the stronger than anticipated customer response to our U.S. strategic pricing actions, with a greater volume of products sold at more competitive prices," CEO DG Macpherson said. "Based on the positive customer response thus far, we are pulling forward the remaining pricing actions originally scheduled for 2018 into the third quarter of this year. This decision requires a significant change to our earnings per share guidance for the year but should enable us to accelerate growth with existing customers and attract new customers sooner than planned."

Sales for the U.S. segment were down 1 percent versus first quarter 2016, driven by a 4 percentage point decline in price and a 1 percentage point decline from lower sales of seasonal products, partially offset by a 4 percentage point increase from volume growth.  Sales to government and heavy manufacturing led performance in the quarter.   

First quarter 2017 sales for the Canada segment increased 4 percent in U.S. dollars and 1 percent in local currency.  The 1 percent increase consisted of 4 percentage points from volume, partially offset by 2 percentage points from lower price and a 1 percentage point decline from unfavorable holiday timing.  

Sales for the Other Businesses increased 12 percent versus the prior year, consisting of 15 percentage points of growth from volume and price, partially offset by a 3 percentage point decline from foreign exchange, primarily attributable to weakness in the British pound.  The performance was driven primarily by 23 percent sales growth for the single channel online businesses.

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