Grainger's North American sales pick up. Why did gross margin slip?
Stronger volume supports higher annual sales and earnings forecasts. Freight and product mix still squeeze the North American division's gross margin.
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W.W. Grainger, Inc.
Grainger distributes maintenance, repair and operating supplies, primarily in North America and Japan. High-Touch Solutions serves businesses directly; Endless Assortment includes MonotaRO and Zoro.
- Ticker
- GWW
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- XNYS
- SEC CIK
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Grainger's November outlook raises more than its earnings-per-share target. The annual sales and operating-cash forecasts also increase, supported by stronger North American demand. Its online businesses still grow faster, but their year-over-year growth rate eased from the second quarter.
| Measure | August | November |
|---|---|---|
| Adjusted sales growth | 11.5%–13% | 13%–14.5% |
| Net sales | 19.4–19.7 | 19.8–20.0 |
| Adjusted EPS | 45.50–47.25 | 47–48 |
| Operating cash flow | 2.25–2.40 | 2.35–2.45 |
The analysis of Grainger's growth and cash forecasts compares stronger North American demand with the slower growth rate in its online businesses.
Segment trends
North American daily sales growth, adjusted for currency, accelerated to 13.8% from 11.7% in the second quarter. Endless Assortment's growth, also adjusted for the U.K. exit, slowed to 19.3% from 20.6%. These are comparisons with the corresponding quarter a year earlier.
Despite the North American gross-margin decline, its adjusted operating margin rose to 17.3% from 17.2%. Endless Assortment's adjusted operating margin improved to 11.7% from 9.8%. Grainger raised its annual margin forecast for that online segment to 10.9% to 11.1%, from 10.4% to 10.8% in August.
For the U.S. business, management expects supplier rebates to more than offset ongoing freight pressure in the fourth quarter, producing a larger-than-normal gross-margin increase from the third quarter.
Profit growth and the U.K. comparison
| Measure | 2025 | 2026 |
|---|---|---|
| Revenue | 4,657 | 5,181 |
| Operating profit | 511 | 828 |
| Net income attributable to Grainger | 294 | 587 |
Third-quarter adjusted EPS reached $12.54 from $10.21. Reported EPS rose to $12.42 from $6.12, a comparison enlarged by the prior year's $196 million U.K. exit loss. Grainger completed the Cromwell sale and Zoro U.K. closure in the fourth quarter of 2025. Current adjusted results exclude $8 million of acquisition transaction expenses.
The second quarter had included a $43 million tariff-refund benefit. That remains part of the earlier reported results and matters when comparing profitability across quarters.
Cash, debt and investment
| Measure | 2025 | 2026 |
|---|---|---|
| Operating cash flow | 597 | 661 |
| Capital spending | 258 | 115 |
| Free cash flow | 339 | 546 |
At September 30, cash and cash equivalents were $768 million, up from $585 million at year-end. Debt carrying value, including current maturities, was $2.69 billion, compared with $2.49 billion. Operating lease liabilities are separate from those debt figures.
On August 26, Grainger completed a $215 million acquisition of technology, intellectual property and talent assets from Adroit Worldwide Media. The purchase adds inventory-management technology to the North American division. It included $210 million paid at closing and a $5 million earlier payment; this acquisition cash is separate from capital spending.
The board declared a $2.49 quarterly dividend on October 28, payable December 1 to holders of record November 9.
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