W.W. Grainger, Inc.

What they do

Grainger distributes MRO products and services through two reportable segments. High-Touch Solutions North America provides value-added MRO solutions rooted in product knowledge and customer expertise, primarily under the Grainger brand in the U.S., Canada, Mexico and Puerto Rico. Endless Assortment operates streamlined online platforms through Zoro in the U.S. and MonotaRO in Japan. The company completed the sale of its Cromwell U.K. business on December 17, 2025, and closed Zoro U.K., exiting that market.

Revenue drivers

• High-Touch Solutions N.A. — Serves mid-size and large businesses with complex purchasing operations, including eProcurement-integrated customers; sales rose 11.9% in Q2 2026 on volume growth and price inflation as tariff costs are passed through.
• Endless Assortment — Comprises the Zoro (U.S.) and MonotaRO (Japan) online channels; Q2 2026 sales rose 13.5% reported and 20.6% on a daily, organic constant currency basis, driven by strong performance at both businesses.
• Other businesses — Primarily the former Cromwell U.K. business and a wholly owned captive insurance entity; these do not meet reportable segment criteria, and Cromwell was sold on December 17, 2025.
• Customer base — More than 4.6 million customers across commercial, healthcare and manufacturing industries, ranging from small businesses to large corporations and government entities; no single end customer exceeded 10% of 2025 total sales.

Recent performance

Second quarter 2026 net sales were $5,021 million, up 10.3% year over year, or 13.7% on a daily, organic constant currency basis. Gross profit margin was 39.5%, up 100 basis points, and operating margin was 16.1%, up 120 basis points, inclusive of $43 million of IEEPA tariff refunds that reduced cost of goods sold. Net earnings attributable to W.W. Grainger were $570 million and diluted EPS was $12.01, up 20.5%. The effective tax rate rose to 24.8% from 23.2% on lower tax credit activity and tax legislation effective in 2026. The company generated $444 million of operating cash flow and returned $341 million to shareholders through dividends and buybacks.

Strategy

Grainger operates a bifurcated model combining high-touch solutions and endless assortment, which it says lets it leverage scale and an advantaged supply chain. The company completed its exit from the U.K. market in the fourth quarter of 2025 through the sale of Cromwell and the closure of Zoro U.K. It continues to evaluate tariff and trade policy impacts, including potential changes in product sourcing, cost management and customer pricing. Management raised full year 2026 guidance, citing strong first half performance and continued demand momentum.

Risks

• Inflation and cost pass-through — Inflation in product, labor, fuel, freight and energy costs could cause operating and administrative expenses to grow faster than net sales, and Grainger may be unable to pass cost increases to customers in a timely manner.
• Supply chain disruption — Grainger's logistics and supply chain network could be disrupted by natural or weather-related disasters, extreme weather and longer-term climate shifts affecting transportation infrastructure.
• Tariffs and trade policy — Recent changes in U.S. and foreign tariff and trade policies continue to drive intermittent disruptions in supply chains, and Q2 2026 results included IEEPA tariff refunds, highlighting exposure to policy shifts.
• Competitive pricing pressure — Increased competitive pricing pressures or changes in customer or product mix are identified risk factors that could affect gross profit margin.

Outlook

Management increased full year 2026 guidance, including a diluted adjusted EPS range of $45.50 to $47.25, after Q2 2026 sales of $5.0 billion and diluted EPS of $12.01. CEO D.G. Macpherson said the increase reflects strong first half performance and continued momentum in the demand environment. The company noted ongoing geopolitical uncertainty and evolving tariff and trade policies, and said it believes its strategy is positioned to navigate a range of outcomes.