W.W. Grainger, Inc.’s GWW sales for the month of Feb 2015 increased by a marginal 2% year over year and remained below the previous month’s sales growth of 3%.
This February had 20 selling days, the same as last year. Sales for the month included a one percentage point positive contribution from acquisitions and a three percentage point negative impact from foreign currency fluctuations, mainly due to a weak Canadian dollar.
On an organic basis, sales improved 4% driven by volume growth of 4 percentage points and a 2 percentage point comparison benefit, as its business in February last year was affected by extreme weather. This increase was partially offset by a 1 percentage point decline in price and a 1 percentage point impact from winter storms in Feb 2015.
Geographically, daily sales in the U.S. during February rose 4%, aided by higher volume (4 percentage points) and favorable comparisons due to the business disruptions last year (2 percentage points). Sales growth was partially offset by a 2 percentage point decline from price because of higher sales to lower-margin customers and a 1 percentage point decline from winter storms. Additionally, branch closures from Texas to Virginia owing to inclement winter weather negatively impacted February sales.
Among the end markets, commercial was up in the low-double digits driven by persistent sales of Ebola related safety products to health care customers. Light Manufacturing, Retail and Government were up in the mid-single digits followed by low-single digits gain in Heavy Manufacturing. While Natural Resources and Reseller were down in the mid-single digits and Contractor sales were down in the low-single digits.
Daily sales in Canada declined 10% in U.S. currency but increased 1% in local currency. Growth was driven by contribution from the WFS acquisition and positive pricing, partly offset by a decline in volume and lower sales of seasonal products. Volume decline was mainly due to reduced sales to the Oil & Gas, Contractor and Retail customer end markets.
Volume decline was offset by growth in the Government and Light Manufacturing customer end markets. Softness in the province of Alberta, where oil and gas activity has slowed significantly in recent months, was the foremost reason behind the sales decline in Canada.
Daily sales at Grainger’s other businesses, including operations in Asia, Europe and Latin America, climbed 8% on volume growth and price (20 percentage points), offset by negative foreign currency translation (12 percentage points) mainly due to weakness in the Japanese yen, euro and Mexican peso versus the U.S. dollar.
In local currency, sales for the business in Japan grew in the mid twenties, while sales for the Mexican business grew in the low teens. Grainger’s single channel online model in the United States, Zoro, continued its growth trend, rising more than 90%.
According to Grainger, the impact of unfavorable foreign exchange was more significant in February than January. The company expects foreign exchange to remain a significant headwind through the rest of the year. Moreover, disruptions from snow storms in the northeast and slowdown in the oil and gas industry remain matters of concern. However, Grainger will benefit from continued investment in eCommerce and single sales channel.
Lake Forest, IL-based Grainger is a leading North American distributor of material-handling equipment, safety and security supplies, lighting and electrical products, power and hand tools, pumps and plumbing supplies, cleaning and maintenance supplies, forestry and agriculture equipment, building and home inspection supplies, vehicle and fleet components, and various aftermarket components.
Grainger currently holds a Zacks Rank #3 (Hold).
Better-ranked stocks in the same sector are Advanced Emissions Solutions, Inc. ADES, AO Smith Corp. AOS and Astec Industries, Inc. ASTE. All these stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment