The 2020 Mid-Year Economic Update_long

Grainger Sales Rise 6% in 2014

Grainger revenues hit $10 billion in 2014 from the prior year; 4Q sales also up 6%.

Grainger (NYSE: GWW), Chicago, IL, reported sales for the year ended Dec. 31, 2014, were $10 billion, up 6 percent from 2013. Profit was $802 million, up 1 percent from the previous year.

"This was a challenging year, and we were not satisfied with our overall 2014 performance," said President and CEO Jim Ryan. "As we committed to a year ago, we addressed several smaller underperforming businesses and believe we have positioned the company for better results going forward. There were, however, several bright spots in 2014, including the United States segment, which continued to perform very well, gaining share with large customers. We were also pleased with the single channel online model businesses in Japan, the United States and Europe, which continued their rapid growth.

"Longer term, we remain optimistic about our opportunities in the large and fragmented MRO market. We are committed to our strategy to grow and gain share, and we will continue to invest to create long-term competitive advantage. In the near term, we remain cautious given the low inflationary environment in the United States, economic headwinds internationally and growing pressure from weaker currencies in Canada and Japan."

Company sales in the fourth quarter increased 6 percent to $2.5 billion. The 6 percent sales growth for the quarter consisted of 7 percentage points from volume, 1 percentage point from price and 1 percentage point from sales of Ebola related safety products, partially offset by a 2 percentage points decline from unfavorable foreign exchange and a 1 percentage point negative variance from lapping an extra month of sales from the E&R Industrial, Inc. acquisition. Profit for the quarter decreased 5 percent to $148.8 million.

The company's gross profit margin for the quarter declined 30 basis points, primarily driven by softer margins in Canada and Fabory. Excluding the items noted in the table above from both years, company operating earnings increased 9 percent.

Sales in the United States segment increased 6 percent in the 2014 fourth quarter versus the prior year. The 6 percent sales growth was driven by 6 percentage points from volume, 1 percentage point from price and 1 percentage point from sales of Ebola related safety products, partially offset by a 1 percentage point negative variance from the extra month of E&R sales in the fourth quarter of 2013 and a 1 percentage point negative variance from the divestiture of several specialty brands on Dec. 31, 2013. Strong sales growth to customers in the natural resources, commercial and manufacturing customer end markets contributed to the sales increase in the quarter.

Sales in Canada increased 3 percent in U.S. dollars, 11 percent in local currency, in the 2014 fourth quarter. The 11 percent sales increase consisted of 7 percentage points from the acquisition of WFS Enterprises Inc. on Sept. 2, 2014, and 4 percentage points increase from volume. The 4 percent volume growth in Canada was led by higher sales to customers in the government and utilities end markets.

Sales for the other businesses increased 13 percent for the 2014 fourth quarter versus the prior year. This performance consisted of 21 percentage points of growth from volume and price, partially offset by an 8 percentage point decline from unfavorable foreign exchange. Sales growth in the other businesses was driven by MonotaRO in Japan and Zoro in the United States and Mexico, partially offset by lower sales from Fabory in Europe.

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