The 2020 Mid-Year Economic Update_long

Grainger’s Q1 Sales Rise 9%

U.S. business posts 6 percent sales gain; sales in Canada rise 2 percent.

After posting a strong first quarter, Grainger (NYSE: GWW), Chicago, IL, lifted its guidance for a stronger 2018, expecting sales growth of 5 to 8 percent. Sales of $2.8 billion increased 9 percent versus $2.5 billion in the first quarter of 2017. Net earnings for the quarter of $232 million were up 32 percent versus $175 million in 2017. Sales for its single-channel online businesses were up the most at 24 percent. There were 64 selling days in the 2018 first quarter, the same as the 2017 first quarter.

“Results for the quarter were strong, led by increased volume in our U.S. business with both large and medium customers, supported by a strong demand environment,” said DG Macpherson, Chairman and Chief Executive Officer. “Performance in Canada has improved although we are still in the early stages of the turnaround. Our single channel and international businesses also contributed to the strong performance. We remain confident that the strategic actions we are executing in the United States and Canada are helping us create a stronger business. Based on the encouraging results we’re seeing, we are increasing our sales and EPS guidance for the year.”

As a result, the company raised its 2018 sales and earnings per share guidance for the year and now expects sales growth of 5 to 8 percent and earnings per share of $14.30 to $15.30. The company’s previous 2018 guidance, communicated on Jan. 24, 2018, was sales growth of 3 to 7 percent and earnings per share of $12.95 to $14.15.

Sales increased 9 percent in the 2018 first quarter versus the prior year, driven by an 8 percentage point increase from volume, 2 percentage points from foreign exchange and 1 percentage point from higher sales of seasonal products, partially offset by a 1 percentage point decline in price and a 1 percentage point decline from the divestiture of a specialty business.

Sales for the Other Businesses increased 18 percent versus the prior year, consisting of 12 percentage points of growth from volume and price and 6 percentage points from foreign exchange. The performance was driven by 24 percent sales growth for the single channel online businesses.

Operating earnings for the Other Businesses were $36 million in the 2018 first quarter versus $32 million in the prior year. This performance included strong results from MonotaRO in Japan and Zoro in the United States and improved performance from the international businesses.

Company operating earnings of $335 million for the 2018 first quarter increased 14 percent versus $293 million in the 2017 quarter. The increase was driven by higher sales and strong expense leverage.


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