For Grainger (NYSE: GWW), 2013 will be a “tale of two halves," said William Chapman, senior director of investor relations, "with strong margin expansion in the first half, followed by much more modest expectations in the second half tied to limited gross margin expansion and higher spending on growth and infrastructure initiatives.
“Those investments, over the long term, will better position Grainger to gain more share, build additional scale and lead the consolidation of the large and fragmented MRO market.”
Grainger plans to continue investing in e-commerce, additional sales coverage, inventory management services, IT infrastructure and distribution center expansion, according to its recent third-quarter earnings podcast. The plan is to invest about $36 million in growth spending in the 2013 fourth quarter, according to Laura Brown, senior vice president of communications and investor relations, bringing the full-year total to $135 million.
Grainger sales were up 5 percent in the third quarter, with daily sales in the U.S. up 6 percent.
During the quarter, Grainger added 100 new sales representatives in the U.S., bringing the total for the year to nearly 200.
E-commerce, another growth driver for the distributor, now represents 33 percent of total company sales.
And the distributor added more than 4,000 KeepStock installations in the third quarter, including vendor managed inventory, customer managed inventory and vending solutions. Grainger now has 11,000 installations in the U.S. (Grainger was recently quoted in MDM’s ongoing Industrial Vending Boom Special Report. Access those articles now.)
By end-market, the distributor reported light manufacturing customer sales in the third quarter were up in high single digits; heavy manufacturing, commercial and natural resources were up in mid-single digits; and government, contractor and retail were up in low single digits. Reseller was down in the low single digits.
