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Grainger Hits 52-Week Low as November Sales Decline 2%

W.W. Grainger, Inc.GWW reported a 2% year-over-year decrease in its Nov 2015 sales as against an 8% gain recorded in the same period last year. Shares of this leading broad line supplier of maintenance, repair and operating (MRO) products hit a 52-week low of $189.60 on Dec 11, after this announcement.

November had 20 selling days, compared with 19 last year. Drop in sales for the month was mainly due to a three percentage point decline from unfavorable foreign exchange, partly offset by four percentage point increase from acquisitions.

During November last year, Grainger benefited from winter storms as well as Ebola related safety products which resulted in a tougher year-over-year comparison this year. On an organic basis, sales declined 3% owing to 1 percentage point decline in price and a 2 percentage point decline from lower sales of seasonal and safety products.

Geographically, daily sales in the U.S. during November fell 5%, which included a 2 percentage point decline from price, 2 percentage point decline in sales of seasonal products, 1 percentage point decline from volume and 1 percentage point decline from sales of Ebola-related safety products in the previous year, partially offset by a 1 percentage point contribution from intercompany sales to Zoro.

Among the end markets, Retail and Government were up in the low-single digits. But Light Manufacturing declined in the low-single digits. It was followed by Commercial and Contractors which were down in the mid-single digits and Heavy Manufacturing, down in the high single digits. Resellers were down in the mid-teens while Natural Resources was down in the mid twenties.

Daily sales in Canada plunged 27% in U.S. currency. In local currency, sales dipped 14% due to a 17 percentage point decline in volume and a 1 percentage point decline in sales of seasonal products, partially offset by 4 percentage points increase from price.

Growth in the Agriculture/Mining, Government and Forestry end markets were offset by Daily sales to all customer end markets. From geographic point of view, daily sales in Alberta were down about 30% in local currency, whereas sales in all other provinces in aggregate were down 3% from the prior year.

Daily sales at Grainger's other businesses, including operations in Asia, Europe and Latin America, surged 40% in November due to 33 percentage points contribution from Cromwell and 18 percentage points from volume and price, partially offset by an 11 percentage point decline from unfavorable foreign exchange. Organic daily sales growth of 18 percent in November was primarily driven by the single channel online businesses in Japan and the U.S.

According to Grainger, daily sales in December will have 22 selling days, the same as last year. December sales are expected to slow given the likelihood of extended customer shutdowns near the end of the month.

Grainger expects revenues to decline persistently based on the feedback from its customers and suppliers. Many of its large customers are cutting jobs and planning extended year-end shutdowns during the holidays. However, the company is poised to benefit from cost structure adjustments, made to counter a weaker economic environment. In addition, Grainger's continued focus on investments will accelerate long-term growth.

Lake Forest, IL-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 components.

Grainger currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same sector are Codexis, Inc. CDXS , ScanSource, Inc. SCSC and Aggreko plc ARGKF . While Codexis and ScanSource sport a Zacks Rank #1 (Strong Buy), Aggreko holds a Zacks Rank #2 (Buy).

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GRAINGER W W (GWW): Free Stock Analysis Report

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CODEXIS INC (CDXS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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