Grainger Q1 sales climb 3 percent
Grainger reported first-quarter sales of $2.5 billion increased 3 percent versus $2.4 billion in the first quarter of 2015.
On a daily basis, sales in the quarter increased 1 percent versus the prior year. Net earnings for the quarter of $187 million were down 12 percent versus $211 million in 2015. Earnings per share of $2.98 declined 3 percent versus $3.07 in 2015.
"Revenue and share gains are tracking as we expected given the tough economic environment," said chairman, president and chief executive officer Jim Ryan. "In our U.S. business, share gains with large and small businesses continue to outpace our performance with medium-sized customers. We continue to see price and gross margin pressure driven primarily by the low inflation economic environment and faster growth from lower gross margin customers. At the same time, we have reduced our operating expenses to offset some of the gross margin decline."
Company operating earnings of $317 million for the 2016 first quarter declined 10 percent versus $351 million in the 2015 quarter. The decline was driven primarily by lower gross profit margins and $19 million in restructuring charges recorded in the quarter.
Sales for the U.S. segment were flat versus the 2015 first quarter and declined 2 percent on a daily basis. The 2 percent decrease was driven by a 3 percentage point decline in price and a 1 percentage point decline from lower sales of seasonal products, partially offset by 1 percent from volume growth and a 1 percentage point contribution from increased sales to Zoro, the single channel online business in the United States. Sales to customers in the Government and Light Manufacturing end markets led the sales performance in the quarter.
Operating earnings for the U.S. segment declined 9 percent in the quarter driven by flat sales and lower gross profit margins partially offset by lower operating expenses.
In Canada, first quarter 2016 sales for Acklands-Grainger declined 24 percent in U.S. dollars. On a daily basis, sales declined 25 percent and 17 percent in local currency. The 17 percent decline consisted of 14 percentage points from lower volume and 6 percentage points from the SAP implementation, partially offset by 3 percentage points from price. The business in Canada continues to be affected by weak oil and gas prices and lower commodity prices, resulting in lower sales to all customer end markets. Daily sales in the province of Alberta, which represents about a third of the company's business in Canada, were down 26 percent in local currency versus the prior year. Daily sales growth for all other provinces was down 10 percent in local currency versus the prior year.
The business in Canada posted a $12 million operating loss in the 2016 first quarter versus operating earnings of $9 million in the prior year, primarily driven by the sales decline, a lower gross profit margin and negative expense leverage.
Sales for the Other Businesses segment increased 50 percent for the 2016 first quarter versus the prior year. On a daily basis, sales increased 47 percent, consisting of 33 percentage points from Cromwell, acquired on September 1, 2015, and 17 percentage points of growth from volume and price, partially offset by a 3 percentage points decline from foreign exchange.
Operating earnings for the Other Businesses were $22 million in the 2016 first quarter versus $10 million in the prior year.