) delivered year-over-year sales growth of 13% in May 2012. This
represents an improvement from a 12% growth achieved in April, but
trails the levels attained in March (15%), February (18%) and
January (17%) this year.
Acquisitions added 5 percentage points to growth. Organic sales
increased 9% with higher volume and pricing contributing 6 and 3
percentage points, respectively. However, the growth was partially
offset by a 1 percentage point dip from unfavorable foreign
Geographically, daily sales in the U.S. increased 8%. Per end
markets, Natural Resources was up in the mid-teens. Heavy
Manufacturing increased in the low double-digits while Light
Manufacturing, Retail and Commercial went up in the high
single-digits. Reseller and Government increased in the mid
single-digits. Contractor, however, declined in the low
Canada saw an increase of 9%, driven by a 12 percentage point
increase in volume and 2 percentage point rise in price, partially
offset by negative foreign exchange impact (of 5%). In local
currency, sales increased 14%, driven by growth in the Commercial,
Utilities and Retail end markets.
Daily sales at the company's Other businesses, which include
operations in Europe, Japan, Mexico, India, Puerto Rico, China,
Dominican Republic and Panama, increased 86%, primarily due to
incremental sales from Fabory. Excluding acquisitions, sales
increased 22%, driven primarily by strong growth in Japan and
May 2012 had 22 selling days, one more than May 2011. Looking
forward, June will have 21 selling days compared with 22 last year;
the second quarter of fiscal 2012 will have 64 selling days, same
as the prior-year quarter.
Grainger remains focused on expanding its product offerings and
growing the share of its private label products. The company's
recent catalog, issued in February 2012, offers about 413,000
facilities maintenance and other products, up from 350,000 products
listed in the February 2011 issue. It has a long-term vision to
expand the product count to 500,000 by 2015.
Grainger also focuses on expansion programs for strengthening
its businesses in each of its operating regions, mainly in Asia and
Latin America. Revenues from Other Businesses jumped 104%
year-over-year in first-quarter 2012, reflecting strong growth in
Japan and Mexico and the Fabory acquisition.
However, margins are expected to remain under pressure due to
Grainger's accelerated investments in product line expansion, sales
force expansion, eCommerce, inventory services, distribution
centers and international expansion.
Grainger competes with companies like
Applied Industrial Technologies, Inc.
WESCO International Inc
). The stock retains a short-term Zacks #3 Rank (Hold). We have a
long-term Neutral recommendation on Grainger.
APPLD INDL TECH (AIT): Free Stock Analysis
GRAINGER W W (GWW): Free Stock Analysis Report
WESCO INTL INC (WCC): Free Stock Analysis
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