Grainger Sales Up 3% in 1Q

U.S. segment sales were flat for the quarter compared to the prior year.

Grainger (NYSE: GWW), Chicago, IL, reported sales for the first quarter of $2.5 billion, a 3 percent increase compared to the first quarter of 2015. Profit for the quarter decreased 11.5 percent to $186.7 million.

"Revenue and share gains are tracking as we expected given the tough economic environment," said President and CEO Jim Ryan. " In our U.S. business, share gains with large and small businesses continue to outpace our performance with medium-sized customers.  We continue to see price and gross margin pressure driven primarily by the low inflation economic environment and faster growth from lower gross margin customers.  At the same time, we have reduced our operating expenses to offset some of the gross margin decline. In early February, we reached a significant milestone, successfully implementing SAP in Canada.  We now have our North American business running on one platform, which will drive better service and increased productivity over time."

Results for the quarter included a 4 percentage point increase from acquisitions and a 1 percentage point reduction from foreign exchange. Excluding acquisitions and foreign exchange, organic sales declined 2 percent driven by a 3 percentage point reduction in price and a 1 percentage point reduction in sales of seasonal products, partially offset by a 2 percentage point increase from higher volume.

Sales for the U.S. segment were flat versus the 2015 first quarter and declined 2 percent on a daily basis. The 2 percent decrease was driven by a 3 percentage point decline in price and a 1 percentage point decline from lower sales of seasonal products, partially offset by 1 percent from volume growth and a 1 percentage point contribution from increased sales to Zoro, the single channel online business in the United States.  Sales to customers in the government and light manufacturing end markets led the sales performance in the quarter.

First quarter sales for Acklands-Grainger, the Canadian business segment, decreased 24 percent in U.S. dollars. On a daily basis, sales declined 25 percent and 17 percent in local currency.  The 17 percent decline consisted of 14 percentage points from lower volume and 6 percentage points from the SAP implementation, partially offset by 3 percentage points from price. The business in Canada continues to be affected by weak oil and gas prices and lower commodity prices, resulting in lower sales to all customer end markets.

Sales for the Other Businesses increased 50 percent for the 2016 first quarter versus the prior year. On a daily basis, sales increased 47 percent, consisting of 33 percentage points from Cromwell, acquired on September 1, 2015, and 17 percentage points of growth from volume and price, partially offset by a 3 percentage points decline from foreign exchange. Strong performance for the Other Businesses was driven by 34 percent daily sales growth for the single channel online businesses.

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