Grainger (NYSE: GWW), Chicago, IL, reported sales for the first quarter of $2.44 billion, a 2.3 percent increase compared to the first quarter of 2014. Profit for the quarter decreased 2.6 percent to $211 million.
"This was a challenging quarter," said President and CEO Jim Ryan. "Our results were affected by continued headwinds from the strong U.S. dollar and weakness in the oil and gas sector in North America. We remain encouraged by the growth achieved with large customers in our U.S. multichannel business and the customer acquisition strategy that is fueling our single channel online businesses."
Results for the quarter included a 1 percentage point increase from acquisitions and a 3 percentage points reduction from foreign exchange. Excluding acquisitions and foreign exchange, organic sales increased 4 percent driven exclusively by volume growth.
Sales for the U.S. segment increased 4 percent in the first quarter versus the prior year, driven by 2 percentage points from volume, 1 percentage point from sales of Ebola-related safety products and 1 percentage point from increased sales to Zoro, the single channel online business in the U.S. Sales to customers in the commercial, light manufacturing, retail, government and heavy manufacturing customer end markets contributed to the sales increase in the quarter.
First quarter sales for Acklands-Grainger, the Canadian business segment, decreased 8 percent in U.S. dollars but were up 3 percent in local currency. The 3 percent sales increase in local currency consisted of 7 percentage points from WFS Enterprises Inc., acquired last September, and 2 percentage points from price. This growth was partially offset by a 5 percentage points decline in volume and a 1 percentage point decline from lower sales of seasonal products.
Sales for the Other Businesses increased 8 percent, 21 percent in local currency, for the 2015 first quarter versus the prior year. This performance consisted of 21 percentage points of growth from volume and price, partially offset by a 13 percentage points decline from foreign exchange. Local currency sales growth in the Other Businesses was driven by the single channel online businesses in the United States and Japan, and the multichannel business in Mexico.
Grainger also announced plans to permanently change its capital structure by taking on debt and buying back $3 billion in stock over the next three years, a change that "reflects our confidence in the business and our strategy," Ryan said. The company also plans to add approximately 400 new sales representatives in 2015, double the original number announced in late 2014.