W.W. Grainger Inc. reported moderate first-quarter growth in total and web-only sales, however it expects stronger growth ahead, president and CEO D.G. Macpherson said today.
D.G. Macpherson, chairman and CEO, W.W. Grainger Inc.
“Amid a slow but regular demand environment,” Grainger produced “solid results,” he said.
Grainger’s web-only Infinite Assortment business — comprised of Zoro.com and Japan-based MonotaRo.com — posted a 3.7% sales increase to $751 million.
By comparison, Grainger’s High-Touch Solutions segment — which incorporates the full-service sales through Grainger.com and the corporate’s sales team — grew 3.4% to $3.405 billion. Grainger is a distinguished distributor of maintenance, repair and operations (MRO) products that companies must operate their facilities.
Total net sales gained 3.5% to $4.235 billion.
B2B buyers drive Zoro’s growth
Within the Infinite Assortment business, Grainger said revenue was driven by Zoro’s core B2B buyers and MonotaRO’s enterprise customers but partially offset by the “continued decrease” in Zoro’s non-core or B2C customers.
Macpherson said on an earnings call today that Zoro has traditionally been effective at acquiring recent customers but not as effective as MonotaRO at retaining them over the long run. He added that Grainger and Zoro compare notes with MonotaRO on construct more repeat business.
“It’s a whole lot of marketing science, what to present to customers after the primary order, understand who those customers are, and presenting the appropriate products and the appropriate offers after we get that first order,” Macpherson said.
He added that total Infinite Assortment sales were adversely affected by the lower value of the Japanese yen and noted that, on a day by day, constant currency basis, the web-only division’s sales were up 10%.
The division’s gross profit increased 2.8% to $220 million, but its gross margin slipped to 29.3% from 29.6%. Grainger attributed the lower margin to an “unfavorable product mix” at Zoro, “which was partially offset by freight efficiencies at MonotaRO.”
Grainger said the Infinite Assortment business unit ended Q1 with a 13% year-over yr increase to 14.581 million registered customers, including 5.322 million at Zoro and 9.259 million at MonoraRO. The unit’s variety of lively SKUs increased 10% to 13.2 million.
Looking ahead, Grainger said its total company revenue guidance for this yr is an expected growth rate range of 4.3% – 7.3% to total sales of $17.2 billion to $17.7 billion.
“We be ok with our ability to realize share, grow to be more productive, and to make sure that we entice customers in the long run,” Macpherson said.
Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. [email protected].
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