Distributors

Grainger’s 1Q Report Shows Future Strategy

If you happened to catch the Grainger first quarter earnings report at tedmag.com, you noticed that the distributor of industrial products reported an overall company sales increase of 3% for the first quarter of 2016.

“While we are currently experiencing economic headwinds and our short-term results are affected, we continue to manage the business for the long term,” the Senior Vice-President of Communications and Investor Relations said in a conference call. “Our investments in eCommerce, KeepStock and supply chain, including the New Jersey and Toronto distribution centers, will provide and support growth for years to come.”

The report also shows Grainger’s sales in the United States for the first quarter were actually down. Company sales for the quarter increased 1% on a daily basis. The 1% sales growth included 4 percentage points from Cromwell acquired on September 1, 2015, and a 1 percentage point reduction from foreign exchange. By month, daily sales were as follows: up 4% in January, up 1% in February, and down 1% in March. Digging deeper into Grainger’s first quarter earnings in the United States, the company said, “Government was up in the mid-single-digits. Light Manufacturing and Retail were up in the low-single-digits. Commercial was down in the low-single-digits. Contractor and Heavy Manufacturing were down in the mid-single-digits. Reseller was down in the low-double-digits. And Natural Resources was down in the mid-teens.”

But maybe the biggest news to come out of the Grainger announcement were the restructuring plans. Grainger closed five U.S. branches in the first quarter.  It plans to close 50 more between now and the end of 2016. “While negligible in the first quarter, we now anticipate gains on sales of restructuring related assets to be $5 million to $10 million pretax over the rest of the year,” Grainger said.

Still, financial analysts are impressed with the results. First-quarter 2016 adjusted earnings per share of $3.18 increased 3% from the prior-year figure of $3.10. And the earnings were much better than Zack’s Consensus Estimate of $2.86. Grainger expects full year earnings to be between $11 and $12.80.

 

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