Grainger Merging Lab Safety Supply with Grainger Industrial Supply

Lake Forest, Ill.-based distributor Grainger is combining its Lab Safety Supply unit with the Grainger Industrial Supply business. At the company's annual analyst conference held Nov. 19, the company's chairman and its CEO said the merger will cut costs and enable faster growth. It slims from two U.S. supply chains to a single supply chain, President and CEO James T. Ryan said.

The company's presentation is available as an audio webcast at Grainger's investor relations page. Ryan started his portion of the presentation by talking about the economic uncertainty company officials see and the sharp drop of U.S. employment and industrial production recently. He said MRO, which is Grainger's business, is resilient during downturns. The company's size enables it to pick up market share, which means its results will grow strongly coming out of a downturn, Ryan said.

The global MRO market is worth about $600 billion, he said, and small distributors still account for more than 70 percent of the total U.S. MRO market. "Our Lab Safety business has underperformed. We've hit a wall with the products in their highly profitable core," he said.

Ryan also said, "Grainger is in a strong position entering this down cycle, and we have no intention of just hunkering down."

As part of the meeting, Grainger reiterated its 2008 earnings per share guidance of $6.00 to $6.20. The company expects 2008 fourth quarter sales to range from down 2 percent to up 2 percent and fourth quarter earnings per share to range from $1.35 to $1.55, while 2009 earnings per share are expected to be between $5.30 and $6.70.

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