W.W. Grainger, Chicago, IL, reported second quarter sales of $1.5 billion, down 13% from the second quarter 2008. Profit for the quarter fell 18% to $92 million.
"Although the economy remains a challenge, we are pleased with our results for the second quarter of 2009. We continue to focus on the things we can control, and we’re selectively investing for growth. Businesses and institutions still need to repair and maintain their facilities in this difficult economy. Our multi-channel business model and our exceptionally high service levels allow us to serve our customers well even in these tough times," said Jim Ryan, Grainger’s CEO.
Ryan added Grainger has not seen "an indication of an economic turnaround at this point."
Daily sales decreased 15% in April, 10% in May and 13% in June. Sales were negatively affected by foreign exchange, which contributed approximately 2 percentage points to the decline. Price contributed a positive 6% while volume was down 19%. Sales of products related to the H1N1 virus contributed less than 1% of sales. There was no material contribution from the sales of seasonal products. Acquisitions contributed about 1% to sales.
In February, the company announced it plans to eliminate 300-400 jobs this year; 298 jobs have been eliminated to date with severance expense of $8 million or five cents per share through the second quarter. The company remains on track to meet projected headcount reductions of up to 400 positions.
Sales for the U.S. decreased 12% in the second quarter. Progress integrating the Lab Safety Supply and U.S. branch-based business is on track.
Sales declined in all customer end markets except government, which was up slightly. Heavy manufacturing declined almost 30%; commercial declined high single digits with most other segments declining in the low to mid teens.
The company continues to expand its product line with 233,000 products included in this year’s catalog. Grainger has been adding more products throughout the year and anticipates having almost 300,000 products in the 2010 catalog. Product line expansion contributed $231 million in sales for the second quarter versus $169 million in the second quarter 2008.
Sales for the Acklands-Grainger business in the quarter were down 19% versus the 2008 second quarter. In local currency, sales were down 6%. The Canadian economy remained weak, particularly in the forestry, manufacturing, transportation and mining industries. Sales to government remained strong, with growth in the utilities and infrastructure related sectors.
Sales for other businesses, which include Mexico, India, Puerto Rico, China, and Panama, were down 9% versus prior year. Mexico is the largest business within this group, with more than 50% of sales. Daily sales in Mexico were down 27% in the quarter versus the same period in 2008. In local currency, daily sales in Mexico decreased 7% for the quarter and were down 9% in April, down 8% in May and down 2% in June. Effective with the month of June, Grainger began including the results of the operations in India.
