Grainger on Friday reported higher sales, profit and earnings in the second quarter of the year, but the MRO giant’s margins were down — and the company reduced its earnings forecast despite improved full-year sales expectations.
The company — long the top distributor on ID’s Big 50 — posted net sales of $4.55 billion in the latest quarter, up 5.6% compared to the same period last year. Gross profit rose 3.6% year-over-year to $1.76 billion, and net earnings attributable to Grainger climbed 2.6% to $482 million.
Gross profit margin, however, came in at 38.5% — a drop of 80 basis points from the second quarter of 2024. Operating margin was also down 20 basis points to 14.9%.
Grainger Chairman and CEO D.G. Macpherson said in the company’s earnings release that although the results were largely “largely in-line with communicated expectations,” some “tariff-related factors” affected its totals and prompted an updated full-year outlook.
Grainger raised its sales forecast from the $17.6 billion to $18.1 billion projection at the end of the first quarter up to between $17.9 billion and $18.2 billion; the new range would amount to annual sales growth of between 4.4% and 5.9%. Its earnings outlook, meanwhile, dropped from the previous $39 to $41.50 per diluted share down to $38.50 to $40.25.
Grainger also reduced its projections for gross profit margin and operating margin over the full year; the company maintained its forecast range for operating cash flow.
“Even amid ongoing macroeconomic uncertainty, our commitment to our customers remains steadfast, and we're well-positioned to continue creating value for all stakeholders,” Macpherson said.
In Grainger’s High-Touch Solutions-N.A. division, which focuses on its larger customers, sales rose by 2.5% year-over-year amid growth “across all geographies” in the quarter, but its profit margin was down by 70 basis points due to what officials called “tariff-related inflation” that resulted in unfavorable price and cost timing and “last-in, first-out” inventory valuation headwinds.
In the Endless Assortment segment, which targets smaller customers and includes the Zoro and MonotaRO e-commerce divisions, sales jumped by 19.7%, while margin improvement in the Zoro unit fueled a 30 basis-point increase in gross profit margin.
