W.W. Grainger, Inc.
) reported a 5% year-over-year increase in sales in May 2013. The
gain has decreased from the prior-month's increase of 8% and is
also below the growth (of 13%) achieved in the same period last
May 2013 had 22 selling days, the same as last year. The gain in
May sales stemmed from higher volumes (3%), prices (2%) and
acquisitions (1%), partly offset by a 1% decline from foreign
Geographically, daily sales in the U.S. rose 6%, helped by higher
volume (3%), favorable pricing (2%) and acquisitions (1%). Light
manufacturing sales rose in the high-single digits, followed by
heavy manufacturing, natural resources, contractor and commercial
in the mid-single digits. Retail sales remained flat.
Government sales were up in the low single digits while reseller
was down in the low single digits. May represented the 41st
consecutive month of sales gain in the heavy and light
manufacturing end markets, driven by several new contracts in the
Canada saw a 1% gain in sales, driven by a 2 % rise in volume,
partly offset by an unfavorable currency impact of 1%. Volume was
negatively affected by weak global demand for Canadian exports
and extended road closures because of adverse weather conditions
which disrupted customer shipments.
Daily sales at Grainger's other businesses, which include
operations in Asia, Europe and Latin America, increased 4%,
driven by higher volume and favorable pricing (10%), partly
offset by unfavorable foreign currency translation (6%).
According to Grainger, daily sales gain in June is trending in
line with that achieved in May.
Grainger, which belongs to the industrial services industry along
Hudson Technologies Inc.
), reported first-quarter 2013 earnings of $2.94 per share, up
14% from $2.57 a year ago and ahead of the Zacks Consensus
Estimate of $2.73. Total revenue was $2.28 billion, up 4% from
$2.19 billion in the year-ago period, but missed the Zacks
Consensus Estimate of $2.3 million.
Grainger increased its earnings guidance in the range of
$11.30-$12.00 per share for fiscal 2013, up from the prior
guidance of $10.85-$12.00 per share. The company also increased
its sales growth guidance to a new range of 5% to 9%, up from the
prior projection of 3% to 9%.
Grainger expects to increase its product count from 413,000 to
500,000 products by 2015. The company continues to expand its
businesses across its operating regions, mainly in Asia and Latin
America. Grainger also continues to invest in e-commerce, as it
is reportedly growing nearly two fold compared to other channels
and is deemed to be its most profitable channel.
However, the recent slowdown in sales is a matter of concern.
Grainger has increased its investment spending for 2013 to $160
million from the previous projection of $135 million. Even though
these initiatives will lead to additional share gains in the
future, it will weigh on margins in the short term.
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 #2 (Buy).
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