W.W. Grainger Inc. ( GWW ) on Friday reported third-quarter financial results that topped Wall Street expectations

The company reported adjusted earnings of $10.21 per share, up from $9.87 in the third quarter of 2024, exceeding analysts’ estimates of $9.95 per share. The rise reflected sales growth and a reduction in shares outstanding.

Adjusted net sales rose to $4.66 billion from $4.38 billion a year earlier, slightly above analysts’ estimates of $4.64 billion.

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The adjusted gross profit margin slipped to 38.6% from 39.2% a year earlier, while adjusted operating margin narrowed to 15.2% from 15.6% in the prior year. This decrease in adjusted operating margin was driven by unfavourable gross margin in High-Touch Solutions – N.A., which was partially offset by expense leverage in Endless Assortment.

W.W. Grainger ( GWW ) reported operating cash flow of $597 million in the third quarter and free cash flow of $339 million after $258 million in capital spending. The company returned $399 million to shareholders through dividends and buybacks.

The company ended the quarter with $535 million in cash and cash equivalents.

Segment Performance

The company’s High-Touch Solutions – North America segment achieved daily, constant-currency sales growth of 3.4%, gross profit margin was 41.1%, a 50-basis-point decrease compared to the prior year quarter, due to tariff-related inflation causing unfavorable price and last-in, first-out (LIFO) inventory valuation headwinds.

The Endless Assortment segment saw much stronger momentum, with sales up 18.2% on a reported basis and 14.6% on a daily, constant-currency basis, fueled by robust performance at both MonotaRO ( MONOF ) and Zoro Inc., resulting in a 60-bps margin improvement. 

The company’s Endless Assortment is a digital-first business segment, featuring online marketplaces like Zoro.com (U.S.) and MonotaRO ( MONOF ) (Japan), that offers a vast catalog of products to customers, particularly small and mid-sized businesses. 

Outlook

W.W. Grainger ( GWW ) narrowed its full-year 2025 adjusted earnings guidance to a range of $39.00 to $39.75 per share, compared with its prior outlook of $38.50 to $40.25 and the analysts’ estimate of $39.51.

The company also trimmed its full-year net sales forecast to $17.8 billion to $18.0 billion from $17.9 billion to $18.2 billion, below Wall Street expectations of $18.02 billion.

It forecasts gross profit margin of 38.9%-39.1%, versus a prior range of 38.6%-38.9%.  Adjusted operating margin is now expected to be 15.0%-15.2%, up slightly from the previous 14.7%-15.1% range. 

On a segment basis, the High-Touch Solutions North America business is guided to deliver an adjusted operating margin of 16.9%-17.0%, and the Endless Assortment segment is targeted at 9.2%-9.5%.

CEO Commentary

D.G. Macpherson, Chairman and CEO, said, “We delivered results in-line with our expectations for the quarter, reinforcing the value and differentiated experience Grainger consistently creates for our customers. Looking ahead, we remain focused on navigating the continued uncertain environment through strong execution, industry-leading service and innovative capabilities to deliver on what matters most to our stakeholders.”

Price Action: GWW shares were trading higher by 0.67% to $962.63 at last check Friday.

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