W.W. Grainger, Inc.
) reported a 4% year over year increase in sales in Jul 2013. The
gain has decreased from the prior-month's increase of 5% and is
also below rise of 11% in Jul 2012.
GRAINGER W W (GWW): Free Stock Analysis
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Jul 2013 had 22 selling days, compared with 21 last year. The
gain in July sales stemmed from higher volumes (5%), prices (1%)
and acquisitions (1%), partly offset by a 1% decline from foreign
exchange, lower sales of seasonal products (1%) and decline from
the timing of July 4 holiday in the U.S. (1%). This year, July 4
fell on a Thursday which contributed to lower sales volume the
Geographically, daily sales in the U.S. rose 6%, helped by higher
volume (6%), favorable pricing (1%) and acquisitions (1%), partly
offset by decline from lower sales of seasonal products (1%) and
timing of the July 4th holiday (1%).
Light manufacturing sales rose in the high single-digits,
followed by heavy manufacturing, Government and commercial in the
mid single-digits. Contractors and natural resources were up in
the low single-digits. Retail sales remained flat while reseller
was down in the mid single-digits.
Daily sales in Canada declined 1% due to an unfavorable currency
impact of 3%, partly offset by 2% rise in volume. Volume was
negatively affected by weak global demand for Canadian exports,
lower commodity prices and weak global demand in the mining
sector. Volume growth was also impacted by lower volume in the
construction and heavy manufacturing segments.
Daily sales at Grainger's other businesses, which include
operations in Asia, Europe and Latin America, decreased 2% as
higher volume and favorable pricing (3%) was offset by
unfavorable foreign currency translation (5%).
According to Grainger, daily sales gain in August is trending in
line with what was achieved in July.
Grainger, which belongs to the industrial services industry along
HD Supply Holdings, Inc.
MSC Industrial Direct Co. Inc.
), reported second-quarter 2013 earnings of $3.03 per share, up
15% from $2.63 a year ago and ahead of the Zacks Consensus
Estimate of $2.96. Revenues in the quarter were $2,381 million,
up 6% from $2,249 million in the year-ago period, but below the
Zacks Consensus Estimate of $2,392 million.
Grainger increased its earnings per share guidance to the range
of $11.40-$12.00 per share for fiscal 2013, up from the prior
guidance of $11.30-$12.00 per share. However, Grainger tweaked
its sales growth guidance to a new range of 5% to 8% against the
prior guidance of 5% to 9%.
Grainger expects foreign exchange to negatively impact the
full-year sales by 1%. The company expects 4% to 10% daily sales
growth for the remainder of the year. Grainger projects gross
margin expansion of 30 to 40 basis points for 2013. The company
is not planning any interim price increase for the remainder of
the year owing to the low-inflation environment for commodities.
Operating margin expansion is projected at 35 to 65 basis points
for the full year.
Grainger will continue to benefit from its focus on expanding its
sales force, product offerings and strengthening its businesses
across all operating regions, mainly in Asia and Latin America,
as well as continued investment in e-commerce - its most
However, the recent slowdown in sales is a concern. Grainger has
an incremental $150 million of growth spending in the pipeline
for 2013. Even though these initiatives will lead to additional
share gains in the future, it will weigh on margins in the short
Lake Forest, Ill.-based Grainger is a leading North American
distributor of material handling equipment, safety and security
supplies, lighting and electrical products, power and hand tools,
pumps and plumbing supplies, cleaning and maintenance supplies,
forestry and agriculture equipment, building and home inspection
supplies, vehicle and fleet components, and various aftermarket
Grainger currently retains a short-term Zacks Rank #3 (Hold).