Grainger posts 2 percent sales gain
Grainger reported sales for the second quarter of $2.6 billion increased 2 percent versus $2.5 billion in the second quarter of 2015.
Net earnings for the quarter of $173 million were down 22 percent versus $221 million in 2015. Earnings per share of $2.79 declined 14 percent versus $3.25 in 2015.
The sales performance included a 4 percentage point contribution from Cromwell Group (Holdings) Limited. Excluding this acquisition, organic sales declined 2 percent, driven by a 1 percentage point decrease in volume and a 1 percentage point reduction in price.
The earnings decline was driven by lower sales, lower gross profit margins and higher operating expenses.
"Grainger and our industry remain challenged by the difficult industrial environment. The U.S. business performed slightly below our expectations due to lower sales volume that was partially offset by better than expected gross profit margins," said chairman, president and chief executive officer Jim Ryan. "Our Canadian business continued to be affected by low oil prices, the fires in Fort McMurray and unfavorable foreign exchange. While these headwinds will likely remain in the near term, we have confidence in our Canadian leadership team and the steps we are taking to return to long-term profitability."
Sales for the U.S. segment declined 3 percent versus the 2015 second quarter. The 3 percent decline was driven by a 2 percentage point decrease in volume and a 2 percentage point decline in price, partially offset by a 1 percentage point contribution from increased sales to Zoro, the single channel online business in the United States. Retail and government customers posted the strongest sales growth in the quarter.
In Canada, second quarter 2016 sales for Acklands-Grainger declined 19 percent in U.S. dollars and 16 percent in local currency. The 16 percent decline consisted of 14 percentage points from lower volume and 2 percentage points from the wildfires in Alberta. The business in Canada continued to be affected by a weak economic environment, resulting in lower sales to most customer end markets. Daily sales in the province of Alberta, which represents about a third of the company's business in Canada, were down 28 percent versus the prior year, while daily sales for all other provinces were down 11 percent.
Sales for the Other Businesses segment increased 49 percent for the 2016 second quarter versus the prior year, consisting of 31 percentage points from Cromwell, 17 percentage points from volume and price and a 1 percentage point benefit from foreign exchange. Strong organic performance for the Other Businesses was driven by 34 percent daily sales growth for the single channel online businesses, partially offset by lower sales in Latin America.