W.W. Grainger Inc., the multibillion-dollar distributor of maintenance, repair and operations (MRO) supplies, expects to gain market share in the United States this year, particularly as it increases sales to both new and existing midsized customers, executives said today.
“We still feel confident in our ability to gain share in the U.S.,” Thomas Okray, chief financial officer, said on an earnings conference call with stock analysts for the first quarter ended March 31, according to a transcript from Seeking Alpha.
“For midsize business, we’re seeing growth with both existing and new customers,” CEO D.G. Macpherson said. “We are expanding our relationships with these customers through pricing programs, including our Red Pass program which has a free freight component.”
Macpherson added, “We’re still learning what’s working and we’re going to continue to make adjustments and we think we can continue to grow very strongly with midsize customers.”
Also contributing to increasing sales to small and midsize businesses is Zoro.com, Grainger’s web-only business for customers who purchase mostly basic MRO supplies and not the more complex equipment Grainger sells through its Grainger, Cromwell and Fabory brands.
Okray said Grainger is making ongoing investments in Zoro but also giving its management more leeway to direct its own growth. “We are giving that business more independence, allowing them to add products on their own,” he said on the conference call. “They added about 200,000 SKUs in the quarter and there’s about 800,000 SKUs in the pipeline. So they’re really stepping on the accelerator.”
Late last year, Grainger executives said that Zoro had several million SKUs and was on course to hit about 10 million in the near term.
Macpherson, responding to a question on the conference call about Grainger’s advertising strategy, said the company is getting a “very strong return on investment” in each of several advertising channels: its paper catalog, digital ads and radio advertising. “The catalog, while we don’t produce many books, is a very strong return on investment,” he said.
Grainger didn’t comment on its ecommerce sales for the first quarter, but in a survey form completed for B2BecNews for the full year 2018, Grainger said its 2018 web sales increased 14.5% year over year to $6.749 billion, or 60% of total sales. It said 2018 total sales increased 8% year over year to $11.221 billion.
At the same rate, its first quarter ecommerce sales would be about $1.7 billion.
For the first quarter ended March 31, Grainger reported:
- Net sales of $2.799 billion, up 1.2% from $2.766 billion in the year-earlier quarter;
- Gross profit of $1.095 billion, up 0.3%%, resulting in a gross profit margin of 39.1%, down from 39.5%;
- Net earnings of $253 million, up 9.1% from $232 million.
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