Grainger Offers Insight into COVID-19 Impact on Industrial Market in Analysts Call

Because of its focus on supplying MRO products to industrial and commercial accounts, W.W. Grainger, Lincolnshire, IL, has a unique perspective on the impact of the COVID-19 coronavirus on business across North America and around the world. While the company reported a +5.5% increase in its 1Q 2020 sale to $3 billion, through mid-April the company is also seeing a double-digit year-over-year sales decline.

Company executives provided more color on market conditions in a April 24 investor call. According to a transcript of the call posted by Thomson Reuters, DG Macpherson, chairman and CEO, told analysts that while the company has experienced “minimal disruptions” so far on nonpandemic-related items, they have seen “shortages in stock-outs of critical pandemic-related items, including N95 masks, sanitizers and other PPE (personal protection equipment).”

“We are working diligently with our suppliers alongside our government and health care customers to secure as much product as possible as well as trying to identify and source suitable alternatives,” he said. “To give you a sense of the magnitude of the problem, in several weeks’ time, we received orders for the same quantity of safety masks that we’ve usually received over several years and in some cases, even decades. This is truly an unprecedented challenge.”

Macpherson also said many of its customers are totally closed, while others are partially operating. “We have a number of customers that we cannot get into to refill vending ourselves, but we flip most of them to customer-managed inventory, and most of those customers have people working. It’s very difficult to say how many are really closed,” he said. “Ten percent are really busy; 40% are less impacted essential businesses; 40% are nonessential, but they’re working on some sort of reduced schedule; and 10% roughly are what we would call disrupted. They may not be fully closed, but for all intents and purposes, they are closed.”

Thomas Okray, the company’s senior VP & CFO, added that through April 21, the company was seeing “year-over-year declines of approximately -10% on a constant currency total company basis with dramatic differences by end market, product categories and customer size.”

 “Not surprisingly, our health care, essential manufacturing and pockets of government are growing significantly faster year-over-year, and we are seeing rapid declines elsewhere in areas such as hospitality and heavy manufacturing,” said Okray. “On the product side, safety and cleaning supplies are significantly up year-over-year with most other categories down, some dramatically. To be clear, this is what we are seeing through the first 15 business days of the month and not meant to be construed as guidance for the quarter.”