Grainger Restructures for Better Focus

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In an attempt to better focus on growth opportunities, W.W. Grainger, Inc. (GWW) recently modified its operating structure. The newly-formed Americas business will comprise Canada, the U.S., Mexico, Panama, Puerto Rico, Dominican Republic, Costa Rica, Colombia and Peru.

To date, Grainger reported its operation in two segments - the United States and Canada. Other businesses included operations in Europe, Asia, Latin America and other U.S. operations.

With immediate effect, the Americas segment will be headed by Court Carruthers, senior vice president and group president, Americas. Carruthers had earlier served as senior vice president and president, Grainger, U.S.

DG Macpherson, senior vice president and group president, Global Supply Chain and International, will head Grainger's emerging operations, which include Brazil, Europe and Asia. He will also look after Grainger’s supply chain, company strategy and the single channel online business model in Japan and the U.S.  Macpherson had previously served as senior vice president and president, Global Supply Chain and Company Strategy.

Furthermore, after 14 years of service, Mike Pulick, previously senior vice president and president, Grainger International, is leaving Grainger at the end of September to pursue a chief executive role elsewhere.
 
Grainger has been building its multichannel model and growing its e-commerce business and concentrated on growth in both mature and growth markets. Grainger uses a multichannel business model to provide customers with a range of options for finding and purchasing products, utilizing sales representatives, direct marketing materials, catalogs and eCommerce. These changes will help the company position its business for growth by increasing its focus and driving more integration across the organization.

However, the recent slowdown in sales is a concern. Grainger plans to spend $150 million for growth initiatives in 2013. Even though these initiatives will lead to additional share gains in the future, it will weigh on margins in the short term.

Lake Forest, Ill.-based Grainger, which belongs to the industrial services industry along with ScanSource, Inc. (SCSC), HD Supply Holdings, Inc. (HDS) and MSC Industrial Direct Co. Inc. (MSM), is a leading North American distributor of material handling equipment, safety and security supplies, lighting and electrical products, power and hand tools, pumps and plumbing supplies, cleaning and maintenance supplies, forestry and agriculture equipment, building and home inspection supplies, vehicle and fleet components, and various aftermarket components.

Grainger currently retains a Zacks Rank #3 (Hold).

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