Grainger full-year sales up 2 percent
Grainger reported sales of $10.1 billion were up 2 percent versus $10 billion in 2015.
Net earnings of $606 million declined 21 percent versus $769 million in 2015. Reported earnings per share of $9.87 were down 15 percent versus $11.58 in 2015.
"In 2016 we faced a challenging demand environment compounded by a lack of inflation, which put pressure on revenue and gross margins. In the face of this pressure, we effectively managed expenses while making moves to improve our long-term competitiveness," said DG Macpherson, chief executive officer. "Our core businesses performed in line with guidance, and we continue to be pleased with our progress on key initiatives including sales force effectiveness and the vertical alignment of the sales force in the United States, the medium-sized customer acquisition and penetration strategy in the United States and the growth of the online model globally. In 2017, we remain focused on creating value for customers, delivering an effortless customer experience and reducing costs.
Sales for the 2016 fourth quarter of $2.5 billion were flat versus the 2015 fourth quarter. Reported net earnings of $61 million declined 58 percent versus $145 million in 2015. Reported fourth quarter earnings per share of $1.01 declined 56 percent versus $2.30 in 2015.
"The fourth quarter and the year contained adjustments from our previously announced restructuring plans as well as several accounting actions that affected our reported results,"Macpherson added. "The largest of these was a goodwill impairment for Fabory. Since we acquired Fabory, the business has struggled with growth and profitability. During the last few years, we've returned the business to solid footing by reducing the cost base and stabilizing revenue. Unfortunately, this progress is not enough to justify the current valuation. As a result, we've recognized an impairment charge on the business. We still believe Fabory can deliver profitable growth for Grainger going forward," he concluded.
The company recorded a charge of $52 million related to a goodwill impairment at Fabory and an intangible impairment in Colombia, and a net charge of $3 million related to restructuring actions. These included closing branches and gains on sale of real estate in the United States and Canada.
Sales in the United States segment declined 1 percent in the 2016 fourth quarter versus the prior year and were flat on a daily basis. The daily sales performance was composed of a 1 percentage point increase from higher intercompany sales to Zoro and 1 percentage point from the timing of the holidays, offset by a 1 percentage point decline from price and a 1 percentage point decline from volume. Government, Retail and Light Manufacturing customers had the strongest sales performance in the quarter.
Sales in the 2016 fourth quarter at Acklands-Grainger declined 11 percent in U.S. dollars. On a daily basis, sales declined 9 percent in U.S. and local currency. The 9 percent daily sales decline consisted of a 7 percentage point decrease from volume and a 4 percentage point decrease from price, partially offset by a 1 percentage point contribution from higher sales of seasonal products and 1 percentage point from the timing of the holidays. Sales to all customer end markets were down versus the prior year.