W.W. Grainger, Inc.: Q3 FY2025 earnings call

What management said about Q3 FY2025, from the documents filed with the SEC on 31 October 2025: press release. Guidance figures: 4 raised, 4 lowered, 2 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Sales rose 6.1 percent: Reported sales were $4,657 million, up from $4,388 million. Currency reduced reported growth by 0.7 points, and the daily impact was nil. Source
• Adjusted EPS rose while reported fell: The gap between reported and adjusted EPS reflects the non-cash U.K. exit loss, which the company excluded from adjusted results. Source
• Endless Assortment grew 18.2%: Endless Assortment sales rose 18.2%, or 14.6% on a daily, constant currency basis, with MonotaRO and Zoro both contributing to growth. Source
• Gross margin fell 60 basis points: Gross profit margin was 38.6%, against 39.2% a year earlier. Gross profit of $1,798 million rose 4.5% on sales growth of 6.1%. Source
• Tariff costs squeezed High-Touch margin: High-Touch Solutions - N.A. gross margin was 41.1%, down 50 basis points. The company cited price / cost timing and LIFO inventory valuation. Source
• Reported operating margin fell 460 basis points: Reported operating margin was 11.0%, on operating earnings of $511 million. Source
• Free cash flow of $339 million: Operating cash flow was $597 million. Capital expenditures of $258 million were deducted to reach free cash flow. Source
• Company intends to exit U.K. market: Management intends to exit the U.K. market, including the planned divestiture of Cromwell, and recorded a non-cash loss in the quarter. Source

“We delivered results in-line with our expectations for the quarter, reinforcing the value and differentiated experience Grainger consistently creates for our customers”

D.G. Macpherson, Chairman and CEO

Guidance

What changed from last quarter

• Guidance lowered: Net sales, sales growth and daily organic constant currency growth ranges were lowered; the Endless Assortment margin top end was cut to 9.5%. Source
• Guidance raised: Gross profit margin, adjusted operating margin and High-Touch Solutions - N.A. margin ranges were raised. Source
• Guidance raised: Full-year capital expenditure range was raised to $0.625-$0.675 billion from $0.55-$0.65 billion. Source
• Guidance kept: Share buyback range and effective tax rate guidance were kept at their prior levels. Source
• New: The company disclosed an intention to exit the U.K. market, including the planned divestiture of Cromwell. Source

Quarterly results and growth drivers

• Sales rose 6.1 percent: Reported sales were $4,657 million, up from $4,388 million. Currency reduced reported growth by 0.7 points, and the daily impact was nil. Source
• Adjusted EPS rose while reported fell: The gap between reported and adjusted EPS reflects the non-cash U.K. exit loss, which the company excluded from adjusted results. Source
• Fewer shares lifted per-share growth: Weighted average diluted shares were 47.9 million in the quarter, against 48.9 million a year earlier. Source

Segments and regions

• High-Touch N.A. sales rose 3.4%: High-Touch Solutions - N.A. sales rose 3.4% on both a daily and constant currency basis, with price contribution improving as tariff costs are passed. Source
• Endless Assortment grew 18.2%: Endless Assortment sales rose 18.2%, or 14.6% on a daily, constant currency basis, with MonotaRO and Zoro both contributing to growth. Source
• Currency trimmed total growth: Total Company sales growth was 6.1% as reported and 5.4% on a daily, constant currency basis. Source

“Looking ahead, we remain focused on navigating the continued uncertain environment through strong execution, industry-leading service and innovative capabilities”

D.G. Macpherson, Chairman and CEO

Gross margin and pricing

• Gross margin fell 60 basis points: Gross profit margin was 38.6%, against 39.2% a year earlier. Gross profit of $1,798 million rose 4.5% on sales growth of 6.1%. Source
• Tariff costs squeezed High-Touch margin: High-Touch Solutions - N.A. gross margin was 41.1%, down 50 basis points. The company cited price / cost timing and LIFO inventory valuation. Source
• Endless Assortment margin rose: Endless Assortment gross margin rose 60 basis points, which the company attributed to improvement across the segment. Source

Operating costs and earnings

• Reported operating margin fell 460 basis points: Reported operating margin was 11.0%, on operating earnings of $511 million. Source
• Adjusted margin fell 40 basis points: Adjusted operating margin was 15.2%, down 40 basis points, with expense leverage in Endless Assortment partly offsetting the High-Touch gross margin decline. Source
• Reported SG&A rose on U.K. charges: Reported SG&A was $1,287 million, or 27.6% of sales. Adjusted SG&A was $1,091 million, or 23.4% of sales. Source
• Tax rate rose on U.K. loss: Reported effective tax rate was 34.7%, against 24.8% on an adjusted basis, because the loss carries no corresponding tax benefit. Source

Cash flow and capital

• Free cash flow of $339 million: Operating cash flow was $597 million. Capital expenditures of $258 million were deducted to reach free cash flow. Source
• Shareholder returns totaled $399 million: Dividends and share repurchases in the quarter totaled $399 million. Source
• Nine-month operating cash flow declined: Nine-month operating cash flow was $1,620 million, against $1,683 million a year earlier. Source

U.K. market exit

• Company intends to exit U.K. market: Management intends to exit the U.K. market, including the planned divestiture of Cromwell, and recorded a non-cash loss in the quarter. Source
• Cromwell classified as held for sale: At quarter end, assets held for sale were $50 million and liabilities held for sale were $82 million. Source
• Loss treated as non-cash: The company described the U.K. loss as non-cash and excluded it from adjusted results; reported EPS includes $4.09 per share of adjustments. Source

Management view and guidance

• Results described as in-line: The CEO said quarter results were in line with management's expectations, citing value and differentiated experience for customers. Source
• Full-year EPS range narrowed: The adjusted diluted EPS range was narrowed to $39.00 to $39.75, from $38.50 to $40.25 in the prior range. Source
• Guidance on an adjusted basis: Guidance is on an adjusted basis, and daily organic sales growth is adjusted for one fewer selling day in 2025. Source

Figures management reported

Risks management discussed

• External: Updated guidance includes known tariff impacts, and tariff costs are being passed through in pricing. Source
• Financial: Tariff-related inflation created price / cost timing and LIFO inventory valuation headwinds on High-Touch gross margin. Source
• Demand: Management described the environment as continued uncertain. Source

Earlier plans management reported on

• Met: Management stated results were in line with its expectations for the quarter. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.