Reuters | WW Grainger Inc.’s daily sales for May jumped 16 percent, and the
industrial distributor said it expects to benefit from the oil spill
clean up in the Gulf of Mexico, sending its shares up about 5 percent.
The company said it saw an increase in sales for products such as oil
booms, degreasers and safety supplies, and expects oil spill related
sales to contribute to growth for some time.
Millions of gallons/liters of oil have poured into the Gulf of Mexico since an April 20 blast on the Deepwater Horizon rig triggered a huge spill, soiling 100 miles (160 km) of coastline.
The company, which offers over 900,000 products and sells almost everything from abrasives to refrigerants to vacuum valves, said oil spill related sales contributed about 50 basis points to the 10 percent increase in United States.
Grainger will benefit from the oil spill in the Gulf of Mexico through the end of the third-quarter, said analyst James Ruskin of Jesup & Lamont Securities Corp, who has a “buy” rating on the stock.
“The May performance is impressive considering tougher comps from H1N1 related sales last year which were partly offset by sales related to cleanup of the oil-spill,” FBR Capital Markets analyst Ajay Kejriwal wrote in a note.
Kejriwal, who has an “outperform” rating on the stock, said although “comps remain easy over the next few months”, it would start becoming tougher from October.
Grainger, which competes with Fastenal Co. and Applied Industrial Technologies Inc., said May sales in the United States rose 10 percent. Daily sales for the company’s other businesses were up 253 percent, primarily due to incremental sales from the acquired businesses in Japan and India, along with strong sales growth in China and Mexico.
Shares of Grainger, which also supplies building maintenance products, were trading up 4 percent at $103.22 Thursday on the New York Stock Exchange. They had earlier touched an intra-day high at $103.81.
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