Grainger saw a 4.5% increase in sales in the final quarter of 2025 as its annual sales approached $18 billion, the MRO giant said Tuesday.
But the company’s net earnings were down compared to the previous fourth quarter, and its gross margin declined amid “segment mix headwinds” in the fourth quarter and “tariff-related inflation” across the full year.
Grainger — the top distributor on ID’s annual Big 50 — reported net sales of $4.43 billion in its latest quarter, up from $4.23 billion in the previous Q4. Gross profit also rose to $1.75 billion, a 4.2% increase year-over-year.
Operating earnings, however, edged up just 0.2% to $634 million, and net earnings attributable to Grainger of $451 million were down 5.1% from the previous Q4. Quarterly gross margin fell by 10 basis points to 39.5% year-over-year, and operating margin dipped by 70 basis points to 14.3%.
Grainger officials said that the company saw strong sales performances in both its operating segments in the quarter, including “increases across most customer end markets” in its larger High-Touch Solutions-N.A. division in the U.S. and Canada. A lower margin, however, offset that sales growth in its earnings totals, which officials attributed to slower growth in North America and increased expenses, including “unforeseen healthcare costs.”
For the full year, Grainger posted sales of $17.94 billion — also an increase of 4.5% — and profit of over $7 billion, up 3.7%. Operating earnings were down 5.4% compared to 2024 to nearly $2.5 billion, and net earnings slipped by 10.6% to over $1.9 billion, although the company noted that operating earnings were up after adjustments to exclude second-quarter restructuring costs and the sale and closure of its operations in the U.K.
Gross margin and operating margin each declined over the full year; the gross margin drop, officials said, was “primarily driven by tariff-related inflation” which led to “unfavorable price/cost timing and last-in, first-out inventory valuation headwinds in the High-Touch Solutions-N.A. segment.”
The company’s initial forecast for 2026 projects annual sales growth of between 4.2% and 6.7%, along with gross margin of 39.2% to 39.5%, operating margin of 15.4% to 15.9%, and earnings between $42.25 and $44.75 per diluted share.
"Despite a challenging macro environment, we drove profitable share gain, made strong progress with our strategic initiatives, and operated with resiliency,” Grainger Chairman and CEO D.G. Macpherson said in a statement. “I'm very proud of the Grainger team and believe we are poised to drive strong performance moving forward."
