Grainger Posts Record 3Q, Raises Earnings Guidance

The giant distributor reported $2.1 billion in sales for the quarter, 11 percent better than a year earlier. Heavy manufacturing led U.S. sales 7 percent higher.

With $2.1 billion in third-quarter 2011 sales and $182 million in net earnings, Grainger posted excellent results Oct. 18 and saw its stock price jump by more than 8 percent as of midday. Jim Ryan, the company’s chairman, president, and CEO, called it "an exceptional quarter for Grainger" as he announced the company is raising its sales growth and earnings guidance for the full year.

While overall 3Q sales rose by 11 percent from a year earlier, the growth rate for U.S. sales was 7 percent, with heavy manufacturing leading all customer end markets and growing by the mid-teens, according to the company’s announcement.

"We saw consistent, double-digit sales growth each month of the quarter and delivered strong earnings growth and cash flow," Ryan said. "Grainger's ability to help customers do more with less has been key to our success. Our growth drivers such as product line expansion, eCommerce, inventory management services and sales force expansion are paying off and helping us gain share. Given our strong performance to date, we are aggressively investing in these proven growth drivers to help meet customers' needs, create competitive advantage, and grow the business.

"Given our strong operating performance to date, and the inclusion of Fabory starting in September, we have raised our 2011 sales growth guidance to a range of 11 to 12 percent and increased our expected earnings per share guidance to a range of $8.80 to $9.00."

Grainger's news release said the earnings guidance excludes the expected $5 million after-tax gain from the sale of its minority ownership position in MRO Korea, which was announced Oct. 11, 2011. The company's previous guidance, effective July 19, 2011, projected sales growth of 9-10 percent and EPS in the range of $8.40 to $8.70.

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