W.W. Grainger Inc. posted a 7.4% year-over-year increase in revenue for third quarter, but its online-only business led overall growth with an increase of 23%, the company said yesterday.
“Our single-channel online businesses—namely, MonotaRO and Zoro—had strong growth and profitability,” CEO D.G. Macpherson said on a conference call with stock analysts.
Zoro operates internationally, with dedicated e-commerce sites in the United Kingdom, Germany and in the United States. It also maintains an online shop on the Zoro section of eBay Canada. In the U.S. alone, Zoro’s sales increased 18% in the third quarter, Tom Okray, Grainger’s chief financial officer, noted on the conference call, according to a transcript from Seeking Alpha.
Grainger didn’t further break out sales figures for Japan-based MonotaRO.com or the other Zoro sites.
Grainger’s other e-commerce sites include its flagship Grainger.com and Canada-based Acklands Grainger and a Zoro section on eBay Canada. Grainger also owns U.K.-based Cromwell Group, which operates business and industrial products e-commerce sites Cromwell.co.uk and Cromwell-industrial.co.uk and a network of physical branches.
On the conference call, Grainger executives also addressed the impact of increased tariffs on imports from China, noting that those imports account for “about 20%” of the cost of goods sold for Grainger’s U.S. operations. “Applying tariff rates of 25%, we estimate our costs would increase by about 2% for the U.S. segment,” Okray said, adding: “We are confident that we can find alternative supply and/or price to cover the expected tariff cost increases.”
Grainger has been operating under a policy it set last year of lower prices, which have helped the company drive up business particularly with mid-sized customers. “All signs are very, very positive on mid-size companies,” Macpherson said on the call in response to question about its pricing policy.
Grainger—a distributor of maintenance, repair and operations (MRO) equipment and supplies that companies, government agencies and institutions use to operate their facilities—didn’t immediately respond to a request for information on its overall e-commerce sales. But it has said that 56% of its 2017 total revenue came in through its e-commerce channels, including websites, its KeepStock vending inventory service and e-procurement systems. At that rate, its Q3 e-commerce sales would come in at about $1.59 billion.
For the third quarter ended Sept. 30, Grainger reported:
- Net sales of $2.831 billion, up 7.4% from $2.636 billion a year earlier;
- Gross profit of $1.079 billion, up 6.1% from $1.107 billion, resulting in a gross profit margin of 38.1%, down slightly from 38.6%;
- Net earnings of $104 million, down 35.8% from $162 million.
For the nine months ended Sept. 30, Grainger reported:
- Net sales of $8.458 billion, up 8.5% from $7.7924 billion a year earlier;
- Gross profit of $3.282 billion, up 6.7% from $3.0763 billion, resulting in a gross profit margin of 38.8%, down from 39.5%;
- Net earnings of $572.89 billion, up 31.8% from $434.67 billion.
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