Grainger Addresses December Slowdown - Modern Distribution Management

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Grainger Addresses December Slowdown

Grainger's expectations are for single-digit growth in 2013.

We’ve heard from MSC that December was not a good month for the market, contributing to a slowdown for the distributor.

Grainger (NYSE:GWW) echoed those feelings today in its fourth-quarter 2012 earnings podcast, but still issued expectations for growth in the first quarter 2013. “At the very end of December, we experienced a dramatic slowdown in sales, contributing to quarterly results that were below our guidance,” said Laura Brown, senior vice president of communications and investor relations.

In December, sales fell 1 percent in the U.S., even as the distributor's overall sales were up 11 percent to $9 billion for the year.

“To put this in perspective, in the U.S. business, we were anticipating 7 percent daily sales growth in the first two-thirds of December and 1 percent daily sales growth in the final one-third of the month," Brown said. "Actual results were much lower with 5 percent daily sales growth in the first two-thirds of the month and a 13 percent daily sales decline in the last one-third of the month, driven by the timing of the holidays and concerns regarding the economy and the fiscal cliff.”

The distributor was also affected by legal, M&A and health care costs that came in above its forecast in the fourth quarter.

That said, Grainger reported a stronger start to the year and expectations for sales growth of 3 percent to 9 percent in 2013, in part due to its acquisition of Techni-Tool Inc., which had sales of $88 million in 2011. That sales growth forecast is lower than last year’s first quarter, when sales grew 16 percent for the distributor.

Brown also provided a view into how Grainger’s end-markets are faring. Light manufacturing was up in the high-single digits; heavy manufacturing and commercial in the mid-single digits; government and retail in the low-single digits; reseller was flat; contractor was down in the low-single digits; and natural resources was down in the mid-single digits.

Access the podcast and script on 

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