W.W. Grainger reported a 9% jump in sales to $5.5 billion in 2005. Net earnings for the year increased 21% to $346 million, as compared to $287 million in 2004.
Sales in the 2005 fourth quarter were $1.4 billion, up 10% versus the prior year fourth quarter. Net earnings of $104 million were up 15% versus $90 million in the same period in 2004.
Sales in the Branch-based Distribution segment increased by 10% in the 2005 fourth quarter. Sales in the U.S. were up 9%, with growth in all customer sectors except transportation, which declined modestly. The wind down of integrated supply and automotive-related contracts resulted in a 2 percentage point reduction in U.S. sales growth. In 2005, Grainger disengaged from contracts representing about one third of the $211 million in integrated supply sales reported in 2004.
The market expansion program, a key growth initiative, contributed about 1 percentage point to the 10% segment sales growth for the quarter. To date, incremental sales from the program were approximately $150 million. The company is currently enhancing its presence in the top U.S. metropolitan markets. For the market expansion program in 2005, Grainger opened nine full-size branches and five Grainger Express(R) locations, relocated 10 branches, expanded 11 existing branches and closed four. Sales in Phase 1 of the program Atlanta, Denver and Seattle grew by 15% in the quarter versus fourth quarter 2004. Sales in Phase 2, covering four markets in Southern California, were up 13% for the fourth quarter over the same quarter in 2004. Sales in Phase 3 Houston, St. Louis and Tampa.