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Pandemic-Related Sales Top Traditional MRO Revenues for Grainger in 3Q 2020

Nov. 5, 2020
Continued demand for key products including masks, gloves and cleaning supplies has kept pandemic sales elevated year-over-year for Grainger.

W.W. Grainger, Lake Forest, IL said in its 3Q 2020 earnings release that its U.S. Segment sales were up +3.1% and outpaced the overall U.S. MRO market, which declined an estimated -5% to -6%. This increase was driven largely by higher volume of pandemic-related products that were partially offset by year-over-year decreases in non-pandemic product sales. The declines in non-pandemic product sales continued to be moderate, while growth in pandemic product sales remained elevated, but began to ease from the levels experienced earlier in the year.

In a Motley Fool transcript of Grainger’s 3Q 2020 earnings call to investment analysts, Grainger’s DG Macpherson, chairman and CEO, said the company’s sales to health-care, government and e-commerce businesses remained strong in the quarter and that sales trends were improving with manufacturing and commercial customers.

“We have successfully worked down our backup of orders for most pandemic-related products, including mass and continued to work with suppliers to catch up on the few categories that remains scarce, including some gloves and hand sanitizers,” he said in the call. “Our gains were supported by pandemic-related demand, sales to new customers and improved sales of non-pandemic product as we started to see some stabilizing trends in underlying business activity. Overall business activity still trails pre-pandemic levels as some customers remain disrupted by COVID.

“While sales of pandemic-related products have decreased since May, continued demand for key products including masks, gloves and cleaning supplies has kept pandemic sales elevated year-over-year. This heightened demand has continued to come from a multitude of new and existing customers across numerous industries as businesses reopen and adjust to the new operating protocols.

“On the non-pandemic side, sales have improved since bottoming out in April. With non-pandemic sales now down about -7% year-over-year,” he said. “This improvement has been seen across most industries or some of the obvious industries remaining the furthest below the pre-pandemic levels. These include airlines, hotels and cruise lines. Based on month-to-date performance, we forecast October sales to finish up around +2% for the U.S. segment on continued trends in pandemic and non-pandemic performance.

 “Predicting the recovery over the next few quarters is very challenging. The path of the virus will have a big impact on whether the recent improvements continue, level-off or reverse. But we feel well-positioned to compete in any environment that comes our way.”