CHICAGO, Oct. 13 /PRNewswire/ -- W.W. Grainger, Inc. (NYSE: GWW) today
reported results for the third quarter and nine months ended September 30,
1999. Sales increased 5 percent to $1,175 million for the third quarter of
1999 versus the third quarter of 1998. Net earnings for the third quarter of
1999 were down 18 percent to $45.8 million, compared to the prior year's
quarter. Earnings per fully diluted share were $0.49 versus $0.57 in the
comparable quarter in 1998, a 14 percent decline.
For the first nine months of 1999, sales increased 4 percent to
$3,412 million, compared to the first nine months of 1998. Net earnings were
$152.6 million, down 12 percent compared to the first nine months of 1998.
Earnings per fully diluted share were $1.62 per share versus $1.75 for the
1998 first nine months, a 7 percent decline.
"While the results are disappointing, we made progress toward achieving
our goals," said Grainger Chairman and Chief Executive Officer Richard L.
Keyser. "We successfully transitioned 19 branches, one Zone Distribution
Center, and our Grainger Parts business to the new business enterprise system.
However, related service disruptions in the quarter reduced sales by
$9 million."
Plans are in place to complete the field rollout of the new system by the
end of the year, with three additional distribution centers and central
systems scheduled in 2000. Presently, 25 out of 370 branches and two out of
six Zone Distribution Centers remain to be converted in 1999.
To handle service disruptions, the Company increased staffing at the
branches and Zone Distribution Centers. It is estimated that the combined
effect of the systems installation issues -- including gross profit on lost
sales along with the incremental operating expenses of $7.5 million -- was an
$11 million reduction in operating earnings or $0.07 per share in the quarter.
Keyser added, "As a result of our continuing investments for growth, our
new initiatives are gaining momentum with strong sales growth from Grainger
Internet Commerce, Grainger Integrated Supply and our international
operations. We are strengthening our leadership position in
business-to-business MRO sales over the Web."
Third quarter sales through the Internet were $30 million, a 740 percent
increase over the third quarter of 1998, and a 58 percent increase over sales
of $19 million in the second quarter of 1999. Based on present volumes, the
Company now estimates its annualized run rate for sales through the Internet
is $140 million, up from $100 million announced in August 1999.
Average daily sales for Grainger Integrated Supply, the Company's
outsourcing unit, increased 84 percent from the third quarter of 1998. Growth
was driven by new contracts and scope expansion on existing engagements.
Sales from the Company's Canadian operations, Acklands - Grainger Inc.,
were up 12 percent for the quarter, and the Company's operations in Mexico,
Grainger, S.A. de C.V., posted a 16 percent increase in sales.
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 document contains statements that are not historical facts and are
forward-looking. The forward-looking statements are based on the Company's
current expectations and some of them are subject to risks and uncertainties
the outcome of which could result in actual future performance being
materially different from the performance indicated. They should be read in
conjunction with the Company's most recent annual report, as well as the
Company's Form 10-K and other reports filed with the Securities and Exchange
Commission, 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 Sept 30 Nine Months ended Sept 30
1999 1998 1999 1998
Net sales $1,175,393 $1,120,038 $3,412,411 $3,296,115
Cost of merchandise
sold 752,657 714,727 2,170,798 2,103,690
Gross profit 422,736 405,311 1,241,613 1,192,425
Warehousing, marketing,
and administrative
expenses 342,354 309,068 977,494 897,825
Operating earnings 80,382 96,243 264,119 294,600
Other income or
(deductions)
Interest income 391 672 1,120 1,152
Interest expense (5,276) (1,550) (9,952) (4,847)
Unclassified -- net 1,405 (1,097) 1,138 (970)
(3,480) (1,975) (7,694) (4,665)
Earnings before
income taxes 76,902 94,268 256,425 289,935
Income taxes 31,145 38,179 103,852 117,424
Net earnings $45,757 $56,089 $152,573 $172,511
Net earnings per share
- Basic $0.49 $0.58 $1.64 $1.78
- Diluted $0.49 $0.57 $1.62 $1.75
Average number of
shares outstanding
- Basic 92,840,777 96,519,586 92,831,640 96,966,816
- Diluted 94,352,612 98,010,294 94,358,453 98,684,554
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 Nine
Months ended September 30, 1999 is available upon request. Contact Bill
Chapman, Investor Relations Director, 847-535-0881.)
SOURCE W.W. Grainger, Inc.
 back to top
Related links:
http://www.grainger.com
Company News On-Call:
http://www.prnewswire.com/comp/953850.html or fax,
800-758-5804, ext. 953850
CONTACT:
William D. Chapman of W.W. Grainger, Inc.,
847-535-0881
|
