12/1/2014
HEADLINES
Grainger Unveils Fabory Improvement Plan
Grainger reported October sales, including fasteners, increased 6%. Excluding acquisitions and foreign exchange, organic sales increased 7%, driven by 6 percentage points of volume growth and a 1 percentage point contribution from sales of Ebola-related safety products.
Sales in the U.S. gained 7%, while sales in Canada increased 2% and sales Grainger’s Other Businesses segment – including results from Asia, Europe, and Latin America – rose 16% in October.
But the bigger news for the fastener industry involves Grainger’s plan for its European fastener business, Fabory Group, which the company chided last month for its “soft performance.”
Grainger purchased Fabory in 2011 for $346 million. The previous year, Fabory had generated sales of $295 million, and Grainger hoped that acquiring Fabory, which had 120 locations and more than 1,600 employees, would significantly enhance its presence across Europe.
However, Fabory is currently generating about $280 million in annual income, a sum Grainger called “roughly breakeven” in its November 11 investor presentation.
To improve Fabory, Grainger plans to trim 10-15% of cost out of the business in 2015, which will include branch “rationalization” and “internal process efficiencies.”
In addition, Grainger intends to refocus Fabory on “core fastener growth” by enhancing sales force effectiveness and eCommerce capabilities.
Globally, Grainger is adding 3,000 new fastener SKUs on its way to realizing 15% fastener revenue growth in the U.S. The company estimates it will achieve “purchase savings” of 43% in 2014.
In addition, the company intends to add 17,000 new fastener items in the first quarter of 2015.
Related Stories:
• Applied Industrial Opens New Distribution Facility
• Fastenal Co. Reports 9.6% Sales Gain
Related Links:
• Grainger
Share: