Grainger Posts Robust eCommerce Sales

1/24/2013 3:47:00 PM
NEWS BRIEF

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Grainger reported record results for 2012, with sales growing 11% to $9 billion and net earnings increasing 5% to $690 million. Earnings per share of $9.52 increased 5%.
“For the full year, we invested an additional $70 million in expanding our product line and sales force, enhancing eCommerce capabilities, increasing inventory management services and expanding our international presence,” stated CEO Jim Ryan.

Full-year results included:

eCommerce: Posted $2.7 billion in eCommerce sales, representing 30 percent of total company sales and an increase of 23 percent versus the prior year.

Sales Force Expansion: Added 160 new sales representatives and contributed approximately 1 percentage point to company sales growth for the year.

Inventory Management: Increased the number of U.S. customer KeepStock installations by 30%, ending the year at approximately 40,000 installations.

Product Line Expansion: Added more than 80,000 new products to the iconic Grainger U.S. catalog, bringing the total number of products in the 2012 printed catalog to more than 413,000.

International: Surpassed $1 billion in sales in Canada and expanded the company’s presence in Latin America by entering Brazil with the acquisition of AnFreixo.

Capital expenditures for the year rose 27% to $250 million, driven primarily by investments to expand the distribution center network in North America. In May Grainger opened new distribution centers in Patterson, CA, and Saskatoon, Saskatchewan, Canada, bringing its global distribution network to 28 facilities.

The company also used cash to fund two acquisitions, including the December 31 acquisition of Techni-Tool, which reported 2011 sales of $88 million.

Overall fourth-quarter sales gained 7% to $2.2 billion, with net earnings up 5% to $156 million. Q4 earnings per share of $2.17 increased 6%.

On a daily basis, sales increased 6%, with 6% daily sales growth in October, 8% in November and 2% in December. The 6% daily sales growth for the quarter consisted of 3 percentage points from price, 2 percentage points from volume, 1 percentage point from Hurricane Sandy-related sales, and 1 percentage point from acquisitions.

Q4 operating earnings increased 17% to $258 million.

United States (75% of revenue)
Sales in the U.S. increased 5% $1.7 billion during Q4, driven by 3 percentage points from price, 1 percentage point from volume, 1 percentage point from Hurricane Sandy-related sales. U.S. daily sales increased 4% in October, 6% in November and declined 1% in December, with manufacturing, commercial and government customer end markets contributing to the sales growth in the quarter.

Operating earnings in the U.S. segment increased 17% to $276 million, driven by sales growth, higher gross profit margins and positive expense leverage.

By end market: light manufacturing was up in the high single digits; heavy manufacturing and commercial were up in the mid-single digits; and government and retail was up in the low single digits.

Full-year U.S. sales grew 6.5% to $6.92 billion, with operating earnings gaining 6.2% to $1.13 billion.

Canada (13% of revenue)
Fourth-quarter sales at Acklands-Grainger increased 14% to $280.3 million, including 8 percentage points from volume, 4 percentage points from foreign exchange, 1 percentage point from price, and 1 percentage point from sales of seasonal products. The sales increase for the quarter in Canada was led by strong growth to customers in the commercial, construction, oil and gas, and utilities end markets. Q4 operating earnings in Canada increased 2% to $29.9 million.

Full-year Acklands-Grainger sales improved 11.4% to $1.1 billion, with operating earnings up 18.4% to $127.4 million.

Other Businesses (12% of revenue)
Sales for the Other Businesses, which includes operations primarily in Asia, Europe and Latin America, increased 16% to $263.8 million due to strong revenue growth in Japan and the incremental sales from the acquired business in Brazil.

The Other Businesses segment posted a $10.4 million operating loss in Q4 versus a $5.4 million profit in the 2011 fourth quarter.

During the quarter, the company announced structural changes to the businesses in Europe, India and China to improve long-term performance, resulting in $13.7 million in restructuring charges.

Grainger Posts Robust eCommerce Sales

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