W.W. Grainger
(
GWW
) reported year- over- year sales growth of 18% in February 2012,
an upsurge from January sales growth of 17%. The sale growth
recorded is the highest so far in 2012 and has also outperformed
the 2011 peak of 16%.
Acquisitions added 5 percentage points to growth, mainly due to
the Fabory business acquired in August 2011. Organic sales
increased 13% with higher volume contributing 12 percentage points
and pricing, adding 3 percentage points. However, a 2-percentage
point dip from lower sales of seasonal products was a partial
offset.
Geographically, daily sales in the United States increased 12%.
Heavy Manufacturing and Retail were up in the mid-teens, Light
Manufacturing, Commercial and Natural Resources were up in the low
double digits, while Contractor, Government and Reseller were up in
the high single digits. Canada saw an increase of 13% due to volume
and price effects which were offset by negative foreign
exchange.
Daily sales at the company's Other businesses, which include
operations in Europe, Japan, Mexico, India, Puerto Rico, China,
Dominican Republic and Panama, increased 100%, primarily due to
incremental sales from Fabory. Excluding acquisitions, sales in
other businesses increased 28%, driven primarily by strong growth
in Japan, Mexico, China and Columbia.
Looking forward, March 2012 will have 22 selling days, 1 day
less than last year. The first quarter 2012 will have 64 selling
days, same as the prior year quarter.
Grainger's earnings increased 19% year over year to $2.13 per
share, beating the Zacks Consensus Estimate by 2 cents. Revenue
reached a record $2.08 billion, increasing 13.7% from the year ago
quarter and also surpassing the Zacks Consensus Estimate of $2.07
billion.
The company reiterated the sales growth in the range of 10%-14%
in 2012. It expects EPS in the band of $9.90-$10.65 for the full
year. The Zacks Consensus Estimate for earnings is at $10.52 per
share.
Grainger remains focused on expanding its product offerings and
growing the share of its private label products. In addition,
E-commerce, which is one of Grainger's most efficient channels and
also considered to be the most profitable, is reportedly growing
twice as fast as other channels. Moreover, the company expects that
Fabory acquisition will provide a better earnings leverage in the
next quarters.
Currently, the shares of Grainger have a Zacks #2 Rank, implying
a short-term "Buy" recommendation. It competes with the companies
like
Applied Industrial Technologies Inc.
(
AIT
) and
WESCO International Inc.
(
WCC
).
Illinois-based Grainger is a leading North American distributor
of material handling equipment including safety and security
supplies, lighting and electrical products, power and hand tools,
pumps and plumbing supplies, etc. The company's services comprise
inventory management and energy efficiency solutions.
APPLD INDL TECH (
AIT
): Free Stock Analysis Report
GRAINGER W W (
GWW
): Free Stock Analysis Report
WESCO INTL INC (
WCC
): Free Stock Analysis Report
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