W.W. Grainger Inc. (GWW) reported a 12% year-over-year increase in daily sales for January 2010. The current year period had one selling day less compared to January 2009. The company benefited from a 5% positive contribution from acquisitions, 2% benefit from the timing of the New Years’ holiday and a 2% favorable impact of foreign currency translation. Excluding these factors, Grainger’s daily sales were up 3% compared to January 2009.
Daily sales in the U.S were up 6% as the company saw growth in almost all the end markets except for Resellers (flat sales) and Contractors (down in mid-single digits). Also, the acquisitions of Imperial and Alliance contributed 2% to the segment sales growth.
In the Canadian (Acklands-Grainger) division, daily sales were up 22% due to favorable impact of foreign currency translation. The division’s daily sales were up 4% in local currency due to strong growth in sales to customers in the oil and gas, and agriculture and mining sectors. Acquisitions contributed 1% to the year over year sales growth in this division.
Sales of Grainger’s other businesses increased 283%, primarily driven by incremental sales from acquisitions in Japan and India, along with sales growth in Mexico and China.
Grainger had recently increased its guidance for 2010. The company expects 2010 sales to grow 6%-10% compared to 2009. The previous guidance was for year-over-year growth of 4%-9%. The company also raised it earnings guidance to the range of $5.40 to $5.90 from a range of $5.30 to $5.80 earlier.
With most of its competitors being forced to reduce inventories, Grainger is confident of increasing its market share through its market expansion and product line expansion programs. We believe the company has adequate financial strength to invest in growth opportunities.
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