Grainger Reports Record Results For 2013

W.W. Grainger, Inc., (NYSE: GWW) reported record results for the year ended December 31, 2013. Sales of $9.4 billion increased 5 percent versus $9.0 billion in 2012. Reported net earnings of $797 million increased 16 percent versus $690 million in 2012. Grainger’s reported earnings per share of $11.13 increased 17 percent versus $9.52 in 2012.

Grainger is North America’s leading broad line supplier of maintenance, repair and operating products. The distributor also has operations in Asia, Europe, and Latin America. “Despite a sluggish economic environment and aggressive investments in growth and infrastructure, this was another record year for Grainger,” said Jim Ryan, chairman, president, and CEO, in a press release.

“We made significant investments aimed directly at increasing our scale and accelerating share gains in the large and highly fragmented MRO market,” Ryan continued. “Going forward, we will continue to invest in areas such as e-commerce, sales force expansion, inventory management solutions and distribution centers in order to drive market share growth and deliver solid returns.”

In its year-end report, Grainger also updated its 2014 earnings per share guidance to $12.10 to $12.85 from $12.25 to $13.00, and its 2014 sales guidance to 5 to 9 percent growth from 6 to 10 percent growth from the previous guidance issued on November 13, 2013. This change is largely due to a weaker Canadian dollar in recent months and the divestiture of a number of the direct marketing Specialty Brands that were sold on December 31, 2013, the company reports.

In the United States, Grainger added 180 new sales representatives in 2013. Since 2009, Grainger has added 930 new U.S. sales representatives who, in aggregate, contributed approximately 1 percentage point of company sales growth in 2013. In general, sales to customers with a sales representative grow at twice the rate of customers that are not covered.

In the U.S., Grainger.com added more than 300,000 new products, bringing the total number of products to more than 1.2 million products online. In Canada, Acklands-Grainger announced the addition of 200,000 products to its online offering. A broader product line enables customers to increase productivity by consolidating their supplier base.

Grainger also enhanced its North America distribution center network to accommodate growth and increase scale. The company opened a 1 million square-foot highly automated distribution center in Illinois that serves as the company’s new central stocking facility. Grainger also began construction on a 500,000 square-foot distribution center in the Toronto area.

Sales for the 2013 fourth quarter of $2.4 billion increased 7 percent versus $2.2 billion in the 2012 fourth quarter. Net earnings of $157 million were essentially flat versus $156 million in 2012. Fourth quarter earnings per share of $2.20 increased 1 percent versus $2.17 in 2012.  The 2013 and 2012 fourth quarters included the following items:

Grainger’s sales in the 2013 fourth quarter increased 7 percent. There were 64 selling days in both the 2013 and 2012 fourth quarters. The 7 percent sales growth for the quarter consisted of 5 percentage points from volume, 4 percentage points from acquisitions and 1 percentage point from sales of seasonal products, partially offset by 2 percentage points decline from unfavorable foreign exchange and 1 percentage point from sales related to Hurricane Sandy in 2012.

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