W.W. Grainger, Inc. Q4 FY2025 earnings call

Key Points

• Despite macroeconomic challenges in 2025, Grainger executed its strategy, leveraging technology and MRO know-how.
• Streamlined portfolio by exiting the U.K. market and invested in supply chain capacity.
• Strategic growth engines like merchandising (net assortment growth of over 85,000 SKUs), marketing (leveraged data for personalization), seller coverage (added ~110 new sellers in 2025), and value-added services (KeepStock expanding) showed progress.
• Distribution network saw investments in new facilities in the U.S. and Japan.
• Financials for 2025: Total company sales grew 4.5% reported and 4.9% daily organic constant currency, operating margin 15%, adjusted EPS grew to $39.48 per share.

The High Touch Solutions segment delivered sales growth of 2.2% on a reported basis or 2.1% on a daily constant currency basis. The Endless Assortment segment saw sales increase 14.3% on a reported basis or 15.7% on a daily organic constant currency basis. The High Touch Solutions segment contributed to overall growth with volume outgrowth, while the Endless Assortment segment showed significant top-line improvement with strong growth in both Zoro and MonotaRO.

Total Company

• Expected revenue between $18.7 billion and $19.1 billion, daily organic constant currency sales 6.5%-9%.

High Touch Solutions

• Daily constant currency sales growth 5%-7.5%, operating margins 16.9%-17.4%.

Endless Assortment

• Daily organic constant currency sales growth 12.5%-15%, Zoro expected to grow in low teens, MonotaRO expected to grow in low teens in local days and currency.

Margins

• Total company operating margins expected 15.4%-15.9%, up 40-90 basis points from 2025.

Capital Allocation

• Expected operating cash flow $2.1-$2.3 billion, CapEx $550M-$650M, share repurchases ~$1B.

• Macroeconomic uncertainty and challenging market environment.
• Tariff dynamics and potential impact on pricing.
• Potential market contraction and its effect on growth.
• Impact of government shutdown on High Touch Solutions segment.
• Foreign currency exchange headwinds affecting Endless Assortment segment.

Q: David Manthey asked about cautiousness in 2026 guidance despite January growth.

A: Donald G. Macpherson mentioned starting conservatively, January was strong but market is a variable.

Q: Jacob Levinson asked about customer conversations.

A: Donald G. Macpherson said tone is okay but no huge volume tailwinds, industry-specific.

Q: Ryan Merkel asked about gross margins.

A: Deidra Cheeks Merriwether explained LIFO and Grainger sales meeting impact.

Q: Christopher Glynn asked about HTS trend vs long-term.

A: Donald G. Macpherson mentioned execution and external factors.

Q: Chris Dankert asked about market contraction.

A: Donald G. Macpherson said manufacturing activity stable, market not fast-growing.

Q: Chris Schneider asked about price in 2026 guide.

A: Deidra Cheeks Merriwether said price north of 3%, minimal pushback.

Q: Connor Maniglia asked about Zoro private label.

A: Donald G. Macpherson said early success in repeat rates, minimal margin impact.