Grainger Posts Higher Q3 Sales, Earnings

MRO distribution giant W.W. Grainger on Thursday posted stronger sales, earnings and profits in its latest quarterly financial report.

The company’s net sales, however, fell just short of analysts’ expectations, and Grainger narrowed its sales forecast heading into the final quarter of the year.

Grainger — long the top company on ID’s Big 50 list — reported net sales of just over $4.2 billion in the July-September window, an increase of 6.7% compared to the same period last year. Gross profit rose 9.1% to nearly $1.7 billion year-over-year, whole operating earnings climbed 10.7% to $667 million. Diluted earnings per share rose by just more than 14%, and the company’s gross profit margin and operating margin were up by 80 and 60 basis points, respectively.

"The team continues to drive value for customers and serve them well amidst a reasonably steady demand environment,” Grainger Chairman and CEO D.G. Macpherson said in a statement. “By executing on our strategy, we saw additional share gain and continued profitability leading to another quarter of strong performance.”

Although the company’s earnings comfortably exceeded Wall Street projections, analysts had reportedly anticipated slightly higher net sales of $4.23 billion for the quarter.

Grainger’s final forecast for the 2023 fiscal year trimmed its sales expectations from $16.4 billion to $16.8 billion at mid-year to $16.4 billion to $16.6 billion. Sales growth is now expected to range from 8% to 9.1% — instead of the previous 8% to 10.6% — while its margin forecasts were slightly upgraded: gross profit margin went from an earlier 39.1% to 39.4% projection up to 39.3% to 39.4%, while operating margin is now expected to be 15.6% to 15.7%, up from 15.2% to 15.7%.

Grainger officials said the company’s flagship High-Touch Solutions - N.A. segment saw “solid volume growth” across all geographies, along with increased profit margin amid “sustained freight and supply chain efficiencies.” Its performance offset a slight margin decline in Grainger’s Endless Assortment segment, which includes its MonotaRO and Zoro e-commerce operations. MonotaRO saw growth in enterprise customers during the quarter, while Zoro reported declining sales to “non-core” customers and slower market demand overall.