UPDATE: W.W. Grainger Posts Downbeat Q4 Earnings, Lowers Guidance

Shares of

dropped 3.9% in pre-market trading after the company reported weaker-than-expected earnings for the fourth quarter and lowered its forecast for the year. For the year, Grainger now projects earnings of $12.60 to $13.60 per share, versus its earlier outlook of $12.90 to $13.80 per share. The company now projects sales growth of 3% to 7%, versus its prior growth forecast of 5% to 9%. The Lake Forest, Illinois-based company posted a quarterly profit of $148.8 million, or $2.14 per share, versus a year-ago profit of $156.7 million, or $2.20 per share. Excluding certain items, the company earned $2.80 per share. Its sales rose 6% to $2.5 billion. However, analysts were estimating a profit of $2.83 per share on sales of $2.5 billion. Grainger's sales in the US climbed 6% to $1.99 billion, while sales in Canada rose 3% to $279.1 million. Grainger's gross profit margin for the fourth quarter shrank 30 basis points. Operating cash flow surged to $297 million from $246 million. The company bought back around 2.1 million shares of stock for $525 million in 2014. "This was a challenging year, and we were not satisfied with our overall 2014 performance. As we committed to a year ago, we addressed several smaller underperforming businesses and believe we have positioned the company for better results going forward," said Chairman, President and Chief Executive Officer Jim Ryan. Grainger shares fell 3.90% to $236.40 in pre-market trading.