Grainger beats forecasts, shares rise
NEW YORK - Building maintenance supply company W.W. Grainger Inc posted a higher-than-expected quarterly profit today as its programs to add new products and expand in certain geographic areas boosted sales and margins.
Shares rose 4.5 percent in early trading after Grainger said earnings rose 12 percent and sales climbed 7 percent in the first quarter.
"We are encouraged by the market share gains achieved in a slowing economy," said Chairman and Chief Executive Officer Richard Keyser.
The Lake Forest-based distributor of lighting, motors, janitorial supplies and other materials used to maintain and repair buildings, reported a profit of $114.2 million, or $1.43 per share, compared with $101.8 million, or $1.17 per share, in the year-ago period.
Sales rose 7 percent to $1.66 billion and operating margins rose 70 basis points to 11.2 percent.
Analysts expected the company to report earnings of $1.36 per share, on sales of $1.66 billion, according to Reuters Estimates.
As part of its market expansion plan, Grainger added three new branches, expanded two locations and relocated three units. The company has also added about 44,000 new products to its catalog, bringing the total number of items to 183,000.
The company raised its full-year earnings forecast, citing aggressive stock repurchase efforts in the first quarter, to a range of $5.80 to $6.10 per share, up from an earlier forecast of $5.65 to $6.00 per share.
Analysts were looking for full-year earnings of $5.75 per share.
Grainger said it had met with the Department of Justice to discuss previously announced allegations related to a contract with the U.S. General Services Administration. The company said that the timing and outcome of the matter are still uncertain and could include a settlement or civil litigation. An "unfavorable resolution" is not expected to have a material impact on Grainger's financial position, but it could result in material payments Grainger said. In 2007, the GSA contract represented less than 2 percent of Grainger's total company sales.
Shares rose to $83.60 early trading from their close at $80 on Friday. The stock had slipped 8.6 percent so far this year, through Friday.