) has witnessed an 8% year-over-year increase in sales in
November 2012. The growth, though up from the prior-month
increase of 6%, compares unfavorably with the highest growth rate
of 18% achieved in February this year.
The growth in November sales stemmed from higher prices (3%)
and volumes (2%). Higher sales of hurricane related products
(2%), resulting from the storm in Northeast U.S and acquisitions
(1%) also contributed to the growth.
Geographically, daily sales in the U.S. rose 6% helped by
favorable pricing (3%) and sale of hurricane related products
(3%). By end markets, Light Manufacturing revenues and commercial
went up in high single-digits. Government, Heavy Manufacturing
and Retail increased in the mid single-digits. However,
Contractor and Reseller sales went up by low single-digits.
Natural Resources were a dampener as it declined in the mid
November was a milestone month for Canada with sales crossing
the $1 billion mark for the year. Sales improved 12% year over
year, driven by a 7 percentage point growth in volume, a 2
percentage point increase in price and favorable currency impact
of 3 percentage points. In local currency, sales increased 8%,
driven by growth in the Commercial, Construction, Utilities, Oil
and Gas end markets.
Daily sales at the company's Other businesses, which include
operations in Asia, Europe and Latin America, increased 17%,
driven by higher volume (14%), acquisitions (7%), partly offset
by unfavorable impacts of foreign currency translation (4%).
November 2012 had 21 selling days, same compared with last
year. Looking forward, fourth quarter will have 64 selling days,
one day more than the prior-year.
Daily sales growth in December is currently trending below the
8% level attained in November. The company expects sales of
products for recovery effort from the storm in Northeast U.S to
aid sales growth. However, timing of the holidays (Christmas and
New Year's Day) will have a negative impact on sales in the
Reflecting on the sales growth figures of 2012, we see that it
trended in the upper double digits till March. The momentum
slowed with growth hovering in the lower double digits till
dipping to 10% in August. Since then sales growth has remained in
the single digits registering 9% in September and plunging to the
lowest level of 6% in October.
Grainger, however, continues to expand its product portfolio
and expects to increase its product count from the current
413,000 to 500,000 products by 2015. The company has historically
seen annual growth of approximately 2% on sales from products
added through the program. Additionally, it focuses on expansion
programs for strengthening its businesses across its operating
regions, mainly in Asia and Latin America.
However, the recent slowdown in the sales growth rate is a
concern. Furthermore, citing a weak economy, Grainger has trimmed
its sales forecast to the range of 11%-12% from the previous
range of 12%-14% for 2012. EPS is currently expected in the range
of $10.55 to $10.75, down from the previous guidance of
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, which belongs to the industry equipment wholesale
industry, retains a Zacks #3 Rank (Hold).
WESCO International Inc.
) is a Zacks #3 Rank (Hold) stock in the same industry. We have a
long-term Neutral recommendation on Grainger.
GRAINGER W W (GWW): Free Stock Analysis
WESCO INTL INC (WCC): Free Stock Analysis
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