W.W. Grainger, Inc. Reports Record Results

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W.W. Grainger, Inc. Reports Record Results
                    1998 Earnings Per Share Increases 7.5%

    CHICAGO, Feb. 3 /PRNewswire/ -- W.W. Grainger, Inc. (NYSE: GWW) today
reported record results for the fourth quarter and year ended Dec. 31, 1998.
For the year 1998, earnings per fully diluted share increased 7.5 percent to
$2.44 versus $2.27 in 1997.  Net earnings for 1998 were $238.5 million,
compared to $231.8 million for the prior year.  Sales increased 4.9 percent in
1998 to $4,341.3 million versus $4,136.6 million in 1997.
    For the 1998 fourth quarter, earnings per fully diluted share increased
9.5 percent to $0.69 versus $0.63 in the fourth quarter of 1997.  Fourth
quarter net earnings were $66.0 million, compared to $63.2 million in the
prior year quarter.  Sales increased 1.2 percent in the fourth quarter to
$1,045.2 million versus $1,032.9 million in the prior year quarter.
    "These results show the strength of Grainger's underlying business, which
performed well despite relative weakness in the industrial economy, milder
weather, and unfavorable Canadian exchange rates," said Richard L. Keyser,
Grainger's Chairman and Chief Executive Officer.  "As a result of our expanded
marketing initiatives, change in product mix, and product cost reductions, our
overall gross profit rose 6.9 percent.  In addition, our return on average
total capitalization continued to improve reaching 16.3 percent in 1998," said
Keyser.
    The Company's results included operating losses incurred to further
develop the Internet Commerce and Integrated Supply businesses.
    "1998 was a challenging year, as will be 1999 given economic uncertainties
and the continued transition of our business.  Nonetheless, we are excited
about the long-term growth opportunities afforded by our nationally-recognized
leadership in business-to-business Internet technology, and our growing
outsourcing business, Grainger Integrated Supply," Keyser said.
    W.W. Grainger, Inc. (GWW), with 1998 sales of $4.3 billion, is the leading
North American provider of maintenance, repair, and operating (MRO) supplies,
services, and related information to businesses and institutions.  GWW shares
are traded on the New York and Chicago stock exchanges.  For more information,
visit Grainger on-line at http://www.grainger.com.

    This press release contains statements that are not historical facts and
are forward-looking.  Based on the Company's current expectations, the
forward-looking statements are subject to risks and uncertainties the outcome
of which could result in actual future performance being materially different
from the performance indicated.  The statements should be read in conjunction
with the Company's most recent Annual Report and Form 10-K and other reports
filed with the SEC containing a discussion of the Company's business and of
various factors that may affect it.

               CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
            (In thousands of dollars except for per share amounts)

                              Three Months ended        Twelve Months ended
                                   Dec. 31                   Dec. 31

                                1998          1997         1998         1997
    Net sales             $1,045,154    $1,032,871   $4,341,269   $4,136,560
    Cost of merchandise
      sold                   639,908       635,980    2,743,598    2,642,208
      Gross profit           405,246       396,891    1,597,671    1,494,352
      Warehousing, marketing,
        and administrative
        expenses             291,864       289,506    1,189,689    1,101,193
        Operating earnings   113,382       107,385      407,982      393,159
    Other income or (deductions)
      Interest income            408           680        1,560        2,896
      Interest expense        (1,805)       (1,449)      (6,652)      (5,461)
      Unclassified--net       (1,073)         (422)      (2,043)        (958)
                              (2,470)       (1,191)      (7,135)      (3,523)
      Earnings before
        income taxes         110,912       106,194      400,847      389,636
    Income taxes              44,919        43,009      162,343      157,803
      Net earnings           $65,993       $63,185     $238,504     $231,833
    Net earnings per share
      - Basic                  $0.70         $0.64        $2.48        $2.30
      - Diluted                $0.69         $0.63        $2.44        $2.27
    Average number of shares
      outstanding
        - Basic           93,936,869    98,164,158   96,231,829  100,604,518
        - Diluted         95,332,970    99,882,478   97,846,658  102,178,952

    Earnings per share and the average number of shares outstanding reflect
    the 2-for-1 stock split effective at the close of business on May 11,
    1998.

    (Supplemental financial information concerning the Quarter and Full Year
    ended December 31, 1998 is available upon request.  Contact Bill Chapman,
    Investor Relations Manager, 847-793-6435.)
SOURCE W.W. Grainger, Inc.
http://www.prnewswire.com/comp/953850.html or fax,
800-758-5804, ext. 953850
CONTACT:
R.D. Pappano of W.W. Grainger, Inc.,
847-793-9030