Grainger Sales Down For 2015 Third Quarter

CHICAGO—Grainger (NYSE: GWW) today reported results for the 2015 third quarter ended September 30, 2015.  Sales of $2.5 billion declined 1 percent versus $2.6 billion in the 2014 third quarter. Net earnings for the third quarter were down 17 percent to $192 million versus $230 million in 2014.  Earnings per share of $2.92 declined 12 percent versus $3.30 in 2014.

The 2015 third quarter included charges of $11.0 million, or $0.11 per share.  These charges reflect cost actions begun in the third quarter related to the announcement of 26 branch closures in the United States and company restructuring, primarily related to payroll.  On an adjusted basis, earnings per share were as follows:

Three Months Ended

September 30, 



% Change

Diluted Earnings Per Share as reported:




    U.S. branch closures


    Company restructuring


Diluted Earnings Per Share as adjusted:




“Our results reflect the challenging industrial economy in North America.  While we remain confident about our ability to gain market share, we are expecting continued revenue deceleration given recent feedback from our customers and suppliers.  A number of large customers have announced layoffs, and there are indications of extended year-end holiday shutdowns.  We have begun the process of aggressively adjusting our cost structure to reflect the weaker economic environment.  At the same time, we are staying focused on providing industry-leading service, while making select investments that will accelerate our growth long term.  These actions are especially important during an economic downturn and the subsequent recovery,” said Chairman, President and Chief Executive Officer Jim Ryan. 

Given the performance to date and the expectation of continued economic weakness, the company lowered its sales and earnings per share guidance.  For 2015, the company now expects sales in the range of -0.5 percent to 0.5 percent and earnings per share of $11.60 to $11.80.  The new guidance includes the benefit of the recent Cromwell Group (Holdings) Limited acquisition, which is expected to contribute approximately 1.5 percentage points of sales growth and $0.01 to $0.02 to earnings per share for the final four months of 2015.  The company’s previous 2015 guidance was issued on July 17, 2015, with expectations of 0 to 2 percent sales growth and earnings per share of $12.00 to $12.50 for the full year.     

Company sales in the 2015 third quarter declined 1 percent driven by a 3 percentage point reduction from foreign exchange and a 2 percentage point benefit from acquisitions.

The company’s gross profit margin declined 1.1 percentage point to 41.9 percent versus 43.0 percent in the 2014 third quarter.

Sales for the U.S. segment were flat in the 2015 third quarter versus the prior year and included 1 percentage point from increased sales to Zoro, the single channel online business in the United States, offset by a 1 percentage point decline in price.

Operating earnings for the United States segment declined 7 percent in the quarter driven by flat sales and lower gross profit margins.  Gross profit margins for the quarter declined 1.2 percentage points primarily driven by price deflation exceeding cost deflation and higher sales to Zoro reflecting the lower transfer price used to account for these intercompany sales.

In Canada, sales for Acklands-Grainger declined 23 percent in U.S. dollars in the third quarter of 2015 and declined 8 percent in local currency.  The 8 percent sales decrease consisted of a 17 percentage point decline in volume partially offset by a 5 percentage point benefit from price and a 4 percentage point contribution from WFS Enterprises, Inc., which was acquired September 2, 2014.  The business in Canada continues to be affected by weak oil and gas prices and lower commodity prices.

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