William D. Chapman
Hi. This is Bill Chapman, Senior Director, Investor Relations for Grainger. Thank you for accessing this recorded message with information regarding Grainger's August 2012 sales results.
I'll begin by reminding you that certain statements and projections of future results made in this webcast constitute forward-looking information. This information is based on current expectations of market conditions and competitive and regulatory environments and involves risk and uncertainty. Please see our 2011 Form 10-K for a discussion of factors as they relate to forward-looking statements.
Let's now take a look at our sales results for August 2012, which had 23 selling days, the same as August 2011. Total company sales increased 10% versus August 2011. These results included a 4 percentage point contribution from acquisitions and a 1 percentage point decline from foreign exchange. Organic sales increased 7%, including 4 percentage points from volume and 4 percentage points from price. In addition, lower sales of hurricane-related products in August of 2012 versus August of 2011 represented a 1 percentage point decline for the month.
Now let's turn our attention to sales results by segment. As a reminder, monthly sales history by reporting segment for the prior 2 years is available on the Investor Relations website, along with a summary of selling days by month and by business. Please note that although some of our businesses have a different number of selling days due to local holidays, we use the number of selling days in the United States as the basis for our calculation of daily sales.
I'll begin with our largest segment, the United States. Daily sales for the U.S. segment increased 4%, consisting of 2 percentage points from volume and 4 percentage points from price, partially offset by a 1 percentage point decline from lower sales of seasonal products and a 1 percentage point drag from a decline in sales of hurricane-related products.
In August of 2011, strong sales of generators and clean-up products from Hurricane Irene contributed 1 percentage point to sales growth, whereas in August of 2012, the net effect of Hurricane Isaac was a small sales decline, primarily due to lost business from multiple branch and customer closures offsetting any incremental business from the storm.
Let's review our customer end markets in the United States. Daily sales performed as follows. Heavy and light manufacturing were up in the high single digits. Commercial and government were up in the mid single digits. Retail was up in the low single digits. Reseller and natural resources were down in the low single digits, and contractor was down mid single digits.
In our Canadian segment, daily sales increased 12% in U.S. currency, including an 11 percentage point contribution from volume and 2 percentage points from price, offset by a 1 percentage point decline from foreign exchange. In local currency, sales for the Canadian segment increased 13%. Strong growth to customers in the commercial, construction, oil and gas, forestry and utilities end markets contributed to this performance.
Daily sales for our Other Businesses increased 85%, primarily due to the incremental sales from the businesses in Europe and Brazil, which were acquired within the last 12 months. Excluding the acquisitions, sales for our Other Businesses increased 30%, driven primarily by strong growth in Japan and Mexico.
Here is some additional information relative to the 2012 third quarter. First, with 23 selling days, August will contribute the most revenue of any month in the quarter. Second, we reached the anniversary of the Fabory acquisition at the end of August. Sales for this business have contributed approximately 4 percentage points to total company sales growth for the last 12 months. Third, September will have 19 selling days, 2 fewer than September of last year. Daily sales growth thus far in September, both domestically and internationally, is running ahead of sales growth in August after adjusting for the 1 percentage point drag from the hurricanes and the incremental benefit from Fabory.
Fourth, September is the fiscal year end for the U.S. federal government, and stronger sales growth to these government agencies is contributing to a better start to the month. Keep in mind that it is difficult to forecast the extent of the benefit for the month as government spending at year end can be unpredictable. Beyond government, each of the remaining customer end markets in the United States is showing improvement versus August.
Finally, we lose a selling day in the third quarter versus the prior year. One less selling day typically results in reported sales being about 1 percentage point lower than the daily rate for the quarter. The 2012 third quarter will have 63 days versus 64 days in the 2011 third quarter.
Please mark your calendar for our 2012 third quarter earnings release on Tuesday, October 16. If you have any questions, please feel free to contact me at (847) 535-0881 or Laura Brown, Senior Vice President, Communications and Investor Relations at (847) 535-0409. Thank you.
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