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W.W. GRAINGER, INC.

GWW
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Business Summary

W.W. Grainger, Inc. is a broad line distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America, Japan and the United Kingdom. In the fourth quarter of 2025, Grainger exited the U.K. market by completing the sale of the Cromwell business and closing the Zoro U.K. business. The Company serves more than 4.6 million customers worldwide across a broad collection of industries including commercial, healthcare, and manufacturing. No single end customer accounted for more than 10% of total sales for the year ended December 31, 2025. The MRO industry is large and fragmented, and Grainger holds an advantaged position with its supply chain infrastructure and a broad in-stock product offering.

Grainger faces competition from a variety of competitors, including manufacturers that sell directly to certain segments of the market, wholesale distributors, retailers and internet-based businesses. Competitors vary by size, from large broad line distributors and eCommerce retailers to small local and regional competitors. Grainger differentiates itself by providing local product availability, a broad product line, sales and service representatives and advanced electronic and eCommerce technology, as well as other services such as inventory management and technical support. No single supplier comprised more than 5% of Grainger's total purchases for the year ended December 31, 2025.

Grainger generates revenue through the distribution of MRO products and services using two business models: high-touch solutions and endless assortment. The high-touch solutions model serves customers with complex buying needs, while the endless assortment model provides a streamlined and transparent online platform with one-stop shopping for millions of products. The Company's two reportable segments are High-Touch Solutions North America and Endless Assortment. Total service revenue accounted for approximately 1% of the Company's revenue for the years ended December 31, 2025, 2024 and 2023.

The High-Touch Solutions N.A. segment provides value-added MRO solutions rooted in deep product knowledge and customer expertise, serving customers with complex buying needs. This segment primarily includes the Grainger-branded businesses in the United States, Canada, Mexico and Puerto Rico. The high-touch solutions businesses offer approximately 2 million products and several services, such as technical support and inventory management. For the year ended December 31, 2025, High-Touch Solutions N.A. reported net sales of $13,993 million , gross profit of $5,832 million , and operating earnings of $2,354 million . Gross profit margin for the segment was 41.7% .

The Endless Assortment segment provides a streamlined and transparent online platform with one-stop shopping for millions of products, including the Company's Zoro and MonotaRO online channels which operate predominately in the U.S. and Japan, respectively. Zoro offers approximately 13 million products and MonotaRO provides access to approximately 29 million products . For the year ended December 31, 2025, Endless Assortment reported net sales of $3,625 million , gross profit of $1,085 million , and operating earnings of $345 million . Gross profit margin for the segment was 29.9% .

On December 17, 2025, Grainger completed the divestiture of the Cromwell business in the U.K., recording a loss of $186 million in SG&A expenses related to the sale with no tax benefit. The Company also completed the closure of Zoro U.K. in its Endless Assortment segment during the fourth quarter of 2025, recording expenses of $10 million in SG&A expenses with no tax benefit. In the second quarter of 2024, the Company recorded restructuring charges in SG&A expenses of $15 million in the High-Touch Solutions N.A. segment and $1 million in Grainger's Other businesses. For the years ended December 31, 2025 and 2024, Grainger repurchased shares of its common stock in the open market for $1,045 million and $1,201 million , respectively. On February 18, 2025, Grainger repaid in full the principal amount of $500 million for the 1.85% Senior Notes that matured in February 2025.

For the year ended December 31, 2025, total Company net sales were $17,942 million , an increase of 4.5% compared to $17,168 million in 2024. Gross profit was $7,009 million with a gross profit margin of 39.1% , a decrease of 30 basis points compared to 2024. Operating earnings were $2,495 million , a decrease of 5.4% compared to $2,637 million in 2024. Net earnings attributable to W.W. Grainger, Inc. were $1,706 million , a decrease of 10.6% compared to $1,909 million in 2024. Diluted earnings per share was $35.40 for 2025, a decrease of 8.6% compared to $38.71 for 2024. Net cash provided by operating activities was $2,015 million for 2025 compared to $2,111 million for 2024.

Business Outlook

The Company's continued strategic aspiration for 2026 is to relentlessly expand Grainger's leadership position by being the go-to partner for people who build and run safe, sustainable, and productive operations. Capital project spending for 2026 is expected to be in the range of $550 and $650 million . Share repurchases for 2026 are expected to be in the range of $950 and $1,050 million .

In the High-Touch Solutions N.A. segment, the business is focused on three areas: advantaged MRO solutions, differentiated sales and services, and unparalleled customer service. In the Endless Assortment segment, the business is focused on product assortment expansion and innovative customer acquisition and retention capabilities. Additionally, all Grainger businesses are focused on continuously enhancing operational processes to improve service and cost through technology, strong supplier relationships, supply chain infrastructure and a continuous improvement mindset.

The Company expects to continue to invest in its business and return excess cash to shareholders through cash dividends and share repurchases, which it plans to fund through cash flows generated from operations. Grainger also maintains access to capital markets and may issue debt or equity securities from time to time.

Capital project spending for 2026 is expected to be in the range of $550 and $650 million , which includes continued supply chain capacity expansion and technology enhancements across the Company. Share repurchases for 2026 are expected to be in the range of $950 and $1,050 million .

For the years ended December 31, 2025 and 2024, Grainger declared and paid $467 million and $421 million , respectively, in dividends to holders of the Company's common stock. On January 28, 2026, Grainger's Board of Directors declared a quarterly cash dividend of $2.26 per share of common stock, payable March 1, 2026 to shareholders of record on February 9, 2026.

The global economy continues to experience elevated levels of volatility and uncertainty, including within the commodity, labor, and transportation markets, driven by a combination of geopolitical developments and macroeconomic factors that can influence demand, cost and execution risk. These dynamics, together with recent changes in U.S. and foreign tariff and trade policies, continue to drive intermittent disruptions in global capital markets and supply chains. The Company is actively monitoring economic conditions in the U.S. and key international markets, including the continued uncertainty regarding evolving tariff and trade policies, changes in interest rates, foreign currency exchange rate fluctuations, inflationary pressures, and the risk of a global or regional economic recession.

Inflation could cause Grainger's operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross margins and lower net earnings. Market variables, such as inflation of product costs, labor rates, fuel, freight and energy costs, as well as geopolitical events, could negatively impact Grainger's ability to effectively manage its operating and administrative expenses. Weakness in the economy, market trends and other conditions affecting the profitability and financial stability of Grainger's customers could negatively impact Grainger's sales growth and results of operations.

Risk Factors

Inflation could cause Grainger's operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross margins and lower net earnings. Disruptions in Grainger's supply chain could result in an adverse impact on results of operations, as Grainger sources products from more than 5,000 primary suppliers worldwide, with no single supplier comprising more than 5% of total purchases for the year ended December 31, 2025. Unexpected product shortages, product cost increases and risks in trade and tariff policies associated with Grainger's suppliers could negatively impact customer relationships. The facilities maintenance industry is highly competitive, and changes in competition could increase costs, impact demand for Grainger's products and services or impact profitability. Cybersecurity threats and incidents, including breaches of information systems security, could damage Grainger's reputation, disrupt operations, increase costs and/or decrease revenues. As of December 31, 2025, Grainger's consolidated indebtedness was approximately $2.5 billion, which could limit Grainger's ability to respond to rapidly changing business and economic conditions.

Management Priorities

Management's message emphasizes the Company's strategic framework, the Grainger Edge, which defines why the Company exists, how it serves customers and how team members work together to achieve its objectives. The Company's purpose is 'We Keep The World Working'. The strategic aspiration for 2026 is to relentlessly expand Grainger's leadership position by being the go-to partner for people who build and run safe, sustainable, and productive operations. Management highlights that each Grainger business has a set of strategic growth drivers to drive top-line revenue and MRO market outgrowth, with the High-Touch Solutions N.A. segment focused on advantaged MRO solutions, differentiated sales and services, and unparalleled customer service, while the Endless Assortment segment is focused on product assortment expansion and innovative customer acquisition and retention capabilities. Management also notes that all Grainger businesses are focused on continuously enhancing operational processes to improve service and cost through technology, strong supplier relationships, supply chain infrastructure and a continuous improvement mindset, which ultimately delivers long-term returns for shareholders.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Segment Analysis
  2. [2] Item 7, MD&A — Segment Analysis
  3. [3] Item 7, MD&A — Segment Analysis
  4. [4] Item 7, MD&A — Segment Analysis
  5. [5] Item 1, Business — Products and Services
  6. [6] Item 1, Business — Products and Services
  7. [7] Item 7, MD&A — Segment Analysis
  8. [8] Item 7, MD&A — Segment Analysis
  9. [9] Item 7, MD&A — Segment Analysis
  10. [10] Item 7, MD&A — Segment Analysis
  11. [11] Item 7, MD&A — Non-GAAP Measures
  12. [12] Item 7, MD&A — Non-GAAP Measures
  13. [13] Item 7, MD&A — Restructuring Actions
  14. [14] Item 7, MD&A — Restructuring Actions
  15. [15] Item 7, MD&A — Liquidity and Capital Resources
  16. [16] Item 7, MD&A — Liquidity and Capital Resources
  17. [17] Item 8, Note 6 — Debt
  18. [18] Item 7, MD&A — Results of Operations
  19. [19] Item 7, MD&A — Results of Operations
  20. [20] Item 7, MD&A — Results of Operations
  21. [21] Item 7, MD&A — Results of Operations
  22. [22] Item 7, MD&A — Results of Operations
  23. [23] Item 7, MD&A — Results of Operations
  24. [24] Item 7, MD&A — Results of Operations
  25. [25] Item 7, MD&A — Results of Operations
  26. [26] Item 7, MD&A — Results of Operations
  27. [27] Item 7, MD&A — Results of Operations
  28. [28] Item 7, MD&A — Liquidity and Capital Resources
  29. [29] Item 7, MD&A — Liquidity and Capital Resources
  30. [30] Item 7, MD&A — Liquidity and Capital Resources
  31. [31] Item 7, MD&A — Liquidity and Capital Resources
  32. [32] Item 7, MD&A — Liquidity and Capital Resources
  33. [33] Item 7, MD&A — Liquidity and Capital Resources
  34. [34] Item 7, MD&A — Liquidity and Capital Resources
  35. [35] Item 7, MD&A — Liquidity and Capital Resources
  36. [36] Item 8, Note 15 — Subsequent Events
  37. [37] Item 8, Consolidated Statements of Earnings
  38. [38] Item 8, Consolidated Statements of Earnings
  39. [39] Item 8, Consolidated Statements of Earnings
  40. [40] Item 8, Consolidated Statements of Earnings
  41. [41] Item 8, Consolidated Statements of Earnings
  42. [42] Item 8, Consolidated Statements of Earnings
  43. [43] Item 8, Consolidated Statements of Earnings
  44. [44] Item 8, Consolidated Statements of Earnings
  45. [45] Item 7, MD&A — Results of Operations
  46. [46] Item 7, MD&A — Results of Operations
  47. [47] Item 8, Consolidated Statements of Cash Flows
  48. [48] Item 8, Consolidated Statements of Cash Flows
  49. [49] Item 8, Consolidated Balance Sheets
  50. [50] Item 8, Consolidated Balance Sheets
  51. [51] Item 8, Note 6 — Debt
  52. [52] Item 8, Note 6 — Debt
  53. [53] Item 7, MD&A — Liquidity and Capital Resources
  54. [54] Item 7, MD&A — Liquidity and Capital Resources
  55. [55] Item 7, MD&A — Non-GAAP Measures
  56. [56] Item 7, MD&A — Non-GAAP Measures
  57. [57] Item 7, MD&A — Segment Analysis
  58. [58] Item 7, MD&A — Segment Analysis
  59. [59] Item 7, MD&A — Segment Analysis
  60. [60] Item 7, MD&A — Segment Analysis

Analysis on 6/8/2026