Grainger on Friday reported an increase in its third-quarter sales but a dramatic decline in earnings.
The MRO giant also lowered its sales forecast heading into the final quarter of the year.
Grainger — long the top company on ID’s Big 50 list — posted $4.66 billion in net sales between July and September, an increase of 6.1% compared to the same period last year. Sales rose 5.4% on a daily, constant currency basis.
In the company’s High-Touch Solutions-N.A. segment, which primarily serves its larger customers, daily sales were up 3.4% amid volume growth and “improving price contribution as tariff costs are passed.” The Endless Assortment segment, meanwhile, saw strong results in both its Zoro and MonotaRO e-commerce operations, leading to a 14.6% daily sales increase.
Grainger’s gross profit of nearly $1.8 billion came in up 4.5% year-over-year, but its gross margin slipped 60 basis points to 38.6%, which the company attributed to unfavorable price and cost timing tied to “tariff-related inflation” and “last-in, first-out” inventory valuation headwinds.
Operating earnings, meanwhile, dropped from $686 million in the previous third quarter down to $511 million, and net earnings attributable to Grainger fell from $486 million to $294 million over that span — a decrease of nearly 40%, although the company noted that adjusted net earnings edged up 0.8%. Grainger’s adjusted results did not include a loss tied to its planned exit from the U.K. market.
The company’s latest full-year guidance reduced its forecast for sales from $17.9 to $18.2 billion at the mid-year point down to $17.8 to $18 billion, which would translate to 3.9% to 4.7% growth. Other projections, including those for gross margin and adjusted operating margin, were raised going into the fourth quarter, while the outlook for adjusted diluted earnings was narrowed from the earlier $38.50 to $40.25 per share to $39 to $39.75.
Grainger Chairman and CEO D.G. Macpherson said in the earnings release that the results were in line with company expectations.
“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,” Macpherson said.
