Grainger’s Skid Intensifies Earnings Jitters
A sales shortfall raises concerns about its ability fend off Amazon and adds to worries about a peak in the industrial cycle.
Off track.
Photographer: David John Griffin/Icon Sportswire via Getty Images
The third quarter was W.W. Grainger Inc.’s chance to prove all the haters wrong. It didn’t deliver.
The distributor of factory-floor basics fell as much as 16 percent on Tuesday morning after reporting third-quarter revenue and gross margin numbers that fell short of analysts’ estimates. It’s the first real verdict on the effectiveness of the draconian price cuts Grainger rolled out last year amid mounting competition from Amazon.com Inc. in the business-to-business marketplace. Grainger had been enjoying outsize sales growth on the back of those cuts, but now it’s lapping tougher comparisons. Revenue increased 7.4 percent in the third quarter; analysts were looking for more like 8 percent growth, which in itself would be a step down from the second quarter.