Grainger Earnings Fall Shy Of Estimations, Tightens Full Year Forecast

WW Grainger Inc GWW announced 21.7 percent drop in its profit for the second quarter despite 2 percent growth in the top line hurt by higher expenses like restructuring. Its adjusted profit also dipped 20 percent on year-over-year basis.

Grainger reported net earnings of $173 million, down 21.7 percent from $221 million while earnings fell 14 percent to $2.79 a share from $3.25 a share in the previous year quarter. On an adjusted basis too net earnings fell 20 percent and EPS witnessed 12 percent downtick to $2.89. This was sharply lower than the Street analysts' expectations of $3.17 a share.

The company's net sales rose 2 percent to $2.56 billion from $2.52 billion in the year-ago quarter. This was more or less in line with the Street analysts' predictions of $2.58 billion.

Chairman, President and CEO, Jim Ryan, commented that "Grainger and our industry remain challenged by the difficult industrial environment. The U.S. business performed slightly below our expectations due to lower sales volume that was partially offset by better than expected gross profit margins. We managed expenses tightly in the quarter given the lower sales volume. Our Canadian business continued to be affected by low oil prices, the fires in Fort McMurray and unfavorable foreign exchange."

He added, "While these headwinds will likely remain in the near term, we have confidence in our Canadian leadership team and the steps we are taking to return to long-term profitability. A bright spot for the quarter was the continued strong performance of our single channel online businesses, which posted topline growth of 34 percent. Despite the significant shortfall in Canada, which contributed to quarterly performance below our expectations, I have great confidence that we have positioned Grainger to capitalize on the attractive growth opportunity in the large and fragmented MRO market."

Looking ahead, Grainger also revised its sales and earnings per share outlook for the full year. Accordingly, it now expects sales growth of 1 - 4 percent and earnings per share of $11.20 - $12.20 for the year. In April, the company guided sales growth of 0 6 percent and earnings per share of $11.00 - $12.80 for the full year. Street analysts are looking for earnings of $11.94 a share on revenue of $10.23 billion.