W.W. Grainger NYSE: GWW reported second-quarter 2026 sales growth and higher profitability, citing broad-based demand improvement, operational execution and tariff refunds, while raising its full-year outlook.
Chairman and CEO D.G. Macpherson said sales remained strong in both the company’s High-Touch Solutions and Endless Assortment segments despite what he described as an uncertain external environment. He said most end markets accelerated during the quarter, with particular strength in manufacturing, government, contractors and retail customers.
“More and more customers are asking us to help them run their operations more efficiently and solve specific challenges,” Macpherson said, pointing to inventory-management and safety-related services as contributors to customer growth.
Second-Quarter Results
Grainger reported total sales growth of 10.3% for the quarter, or 13.7% on a daily organic constant-currency basis. Operating margin was 16.1%, up 120 basis points from the prior-year quarter, while diluted earnings per share rose more than 20% to $12.01.
Operating cash flow totaled $444 million, enabling the company to return $341 million to shareholders through dividends and share repurchases.
Senior Vice President and CFO Dee Merriwether said gross margin reached 39.5%, an increase of 100 basis points from a year earlier. Results included a 90-basis-point benefit from refunds of tariffs paid under the International Emergency Economic Powers Act, or IEEPA, on products directly imported by Grainger.
Merriwether said the company recognized the majority of those refunds during the second quarter as a reduction in cost of goods sold. Grainger expects the remaining benefit over the second half of the year to be immaterial. The company said the refunds, including associated price actions, only partially offset IEEPA-related costs it absorbed in 2025.
Segment Performance and Demand Trends
High-Touch Solutions sales increased 11.9% on a reported basis and 11.7% on a daily constant-currency basis. The segment’s operating margin rose 70 basis points to 17.3%.
The segment benefited from volume gains, pricing and some project-related spending. However, Merriwether said a higher volume of lower-margin products and project sales created less favorable mix than management had expected. Higher freight costs and private-label inventory costs also weighed on margins, while price-cost was approximately neutral during the quarter.
Macpherson said project activity, including work associated with data-center construction and related infrastructure, has supported revenue growth but has reduced gross margin. He said such business is not dilutive to operating margin because it generally carries favorable contribution economics.
Grainger estimates that project spending added about 90 basis points to High-Touch growth this year. Macpherson said direct data-center exposure represents less than 1% of the company’s business, though the broader data-center buildout is contributing to demand in construction, manufacturing and other customer markets.
Endless Assortment sales rose 13.5% on a reported basis, or 20.6% on a daily organic constant-currency basis after adjusting for the closure of Zoro U.K. and currency movements. Zoro U.S. posted daily sales growth of 18.4%, while MonotaRO grew 24% in local days and local currency.
Endless Assortment operating margin increased 160 basis points to 11.5%. MonotaRO’s margin rose 80 basis points to 14%, and Zoro’s margin improved 180 basis points to 7.6%, with both businesses benefiting from top-line leverage.
MonotaRO also benefited from customer pre-buying of petroleum-related products, particularly personal protective equipment and nitrile gloves, ahead of anticipated shortages connected to conflict in the Middle East. Macpherson said the pre-buying totaled roughly $45 million and has fully subsided. Grainger’s updated outlook incorporates slower MonotaRO growth in the back half as that benefit moderates.
Pricing, Margins and Updated Outlook
Management said it adjusted prices during the second quarter to reflect the rollback of IEEPA tariff pricing and the effects of Section 232 tariffs. The company’s May pricing actions were net neutral overall.
Grainger expects to take further pricing actions in September to address rising freight and product costs tied to the Middle East conflict, along with recent Section 232 modifications and new Section 301 tariffs. Macpherson said the actions will be normal-course price discussions with customers rather than force majeure-related surcharges.
The September actions are expected to add about one percentage point to annualized pricing, according to Macpherson. He said full-year price contribution is now expected to be around 4%, at the high end of the company’s prior 3% to 4% expectation.
Grainger raised its outlook for daily organic constant-currency sales growth to a range of 11.5% to 13%. It now expects full-year operating margin of 15.8% to 16.2% and earnings per share of $45.50 to $47.25, representing an increase of more than $1 at the midpoint from prior guidance.
Preliminary July sales rose more than 13% on a daily organic constant-currency basis. The company expects third-quarter sales of more than $5 billion, with daily organic constant-currency growth above 12%. Third-quarter operating margin is expected in the mid-15% range, down sequentially as the company laps the second-quarter tariff-refund benefit.
CFO Transition
Macpherson also said Merriwether will step down effective Sept. 4 to pursue another opportunity. Laurie Thomson, Grainger’s vice president, controller and principal accounting officer, will become interim CFO effective Sept. 5 while retaining her controllership responsibilities.
The company said it will begin a search for a permanent CFO immediately and that the transition is not expected to affect day-to-day operations.
About W.W. Grainger (NYSE:GWW)
W.W. Grainger, Inc NYSE: GWW is an industrial supply distributor founded in 1927 and headquartered in Lake Forest, Illinois. The company supplies maintenance, repair and operations (MRO) products and services to businesses, institutions and government customers. Over its long history Grainger has developed a broad product assortment and a national distribution network that supports operations across a range of end markets, including manufacturing, healthcare, hospitality, transportation and public sector organizations.
Grainger's product portfolio spans core categories such as electrical and lighting, safety and personal protective equipment, material handling, motors and power transmission, plumbing and HVAC, fasteners and adhesives, hand and power tools, and janitorial and facility supplies.
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