Fabory and Cromwell owner Grainger saw sales of $3 billion in Q1 2020, up 7.2% (5.5% on a daily basis).
The gross profit margin (reported and adjusted) was 37.4% (39.1% in Q1 2019). Grainger saw higher growth in its lower margin endless assortment business, as well as headwinds in the US segment relating to customer and product mix from the Covid-19 pandemic.
With Covid-19 looming large, the firm is suspending its 2020 guidance and pausing share repurchases.
Reported operating earnings for Q1 2020 of $159 million were down a significant 56% versus $363 million in Q1 2019. Reported earnings in Q1 2020 included £184 million in restructuring and non-cash impairment charges – primarily related to Fabory in the Netherlands. On an adjusted basis, operating earnings of $343 million were down 6% versus $365 million in Q1 2019.
For the 2020 first quarter, the company's reported tax rate was negative 30.4% versus 25.4% in the 2019 first quarter. The lower tax rate in the current year quarter was primarily driven by tax benefits related to the Fabory business, Grainger said.
"During these challenging times, as an essential business, Grainger remains more committed than ever to achieving our purpose … to Keep the World Working,” DG Macpherson, Chairman and Chief Executive Officer.
“We are focused on serving our customers well, ensuring the safety and well-being of our team members, and maintaining a strong financial position to support us through this crisis. By supporting customers who are saving lives and keeping communities safe, we are demonstrating the power of our products and solutions, deep customers relationships, and exceptional customer experience. Our strategy matters even more today.
"In the midst of the uncertainty, we delivered robust top-line growth, solid profitability, and continued to produce strong operating cash flow in the first quarter. We also bolstered our already solid financial position, maintaining our flexibility to continue making thoughtful investments for the future. We intend to persevere through this crisis and I am confident that we are well-positioned to come out stronger on the other side."
