Grainger — No. 3 on Industrial Distribution’s Big 50
List — reported its 2017 first quarter financials on April
18, led by a slight increase in year-over-year sales and
a modest decline in profit, while the company detailed
plans to accelerate changes to its pricing structure.
The company posted Q1 total sales of $2.54 billion,
up 1.4 percent year-over-year. Operating profit of
$295.5 million was down 6.8 percent, while total
profit of $174.7 million declined 6.4 percent. Grainger
primarily attributed the Q1 profit declines to changes
in strategic pricing, which the company first gave notice
of last November and CEO D.G. Macpherson discussed
in-depth during the company’s annual Grainger Show
March 13 in Orlando.
“Overall, the first quarter clearly fell short of our
expectations, driven primarily by the stronger than anticipated customer response to our U.S. strategic pricing
actions, with a greater volume of products sold
at more competitive prices,” Macpherson said in
Grainger’s earnings release April 18. “Based on the positive customer response thus far, we are pulling forward
the remaining pricing actions originally scheduled for
2018 into the third quarter of this year. This decision
requires a significant change to our earnings per share
guidance for the year but should enable us to acceler-
ate growth with existing customers and attract new
customers sooner than planned.”
Those pricing changes were primarily implemented
during this past January and February. Grainger states
those strategic pricing actions as follows:
• Adjusting list prices across the board to make it easier
for large customers to consolidate their purchases.
• Introducing new web prices on about 450,000 SKUs
to drive medium and large noncontract customer
acquisition and growth.
• Negotiating large customer contracts with more
competitive pricing for infrequently purchased items.
The company said results from the Q1 pricing actions
showed that customers with access to lower pricing bought more than the company’s expectations,
providing confidence that those pricing actions were
Grainger said web pricing will be available on all
SKUs in Q3.
Grainger Accelerates Strategic Pricing Actions
England-based Wolseley — No. 1 on ID’s Big 50 — announced wholesale changes to the company during its
2017 first half financial report on March 29, including
an overall rebranding and name change. Citing that the
company does 84 percent of its total business in the U.S.
and looks to further invest in U.S. operations, Wolseley
plans to rebrand as Ferguson effective July 31. The
company will continue to use the Wolseley name in the
U.K. and Canada markets. Along with the rebranding,
Wolseley announced the upcoming July 31 retirement of
Ferguson CEO Frank Roach. He will be succeeded on that
date by Kevin Murphy, who has been Wolseley’s COO for
the past 10 years. On April 6, Wolseley announced the
appointment of Kevin Fancey as the new president of
Wolseley Canada, effective June 5 … Ace Hardware
Corp. announced in early April it has hired former
27-year Grainger veteran Mark Spanswick to the position
of president and general manager of Ace Wholesale
holdings … Sonepar USA has reorganized leadership of
its West region, as Codale Electric Supply president Jon
Mitchell has assumed responsibility of the region. Mitchell
takes over the position held by Bob Zamarripa, who has
re-focused his efforts on leading OneSource Supply
Solutions … Grainger has confirmed it will invest $273
million in a new distribution center in Louisville, KY.
Reports say the company expects construction to be com-
pleted around mid-to-late 2020. Grainger doesn’t have a
DC in Kentucky, but has retail branches in Louisville and
Lexington. In mid-March, Grainger also announced it has
added cutting tool reconditioning to its metalworking
solutions … Broken Arrow, OK-based BlackHawk
Industrial recently hired former Anixter and HD Supply
executive John Mark to the position of COO, and in late
March announced the hire of Karl Scott as its new CFO.