Grainger followed its strongest quarter in three years with an even faster sales-growth rate in 2Q26, as broad-based customer demand and market-share gains powered double-digit growth across both of its business segments.

The MRO supplies distributor reported Aug. 4 that 2Q sales increased 10.3% year-over-year to $5.02 billion. Daily organic constant-currency sales climbed 13.7%, accelerating from the 12.2% growth Grainger posted in its standout 1Q26.

MDM’s Grainger Deep Dive

See our three-part Grainger Premium series below, which will soon be packaged into MDM’s next Case Study report that includes additional reporting, commentary and analysis:

• • Part 1: Grainger’s High-Touch Advantage – How the MRO Leader Turned Customer Problems into a Growth Engine
  • Part 2: Inside Grainger’s Assortment Engine: Curation, Private Label and the Power of Product Data
  • Part 3: Grainger’s 30-Year Digital Head Start Is Still Compounding

The Big Picture

Grainger’s 2Q gross profit increased 13.0% to $1.98 billion, while gross margin expanded 100 basis points to 39.5%. Operating profit jumped 19.0% to $807 million, with operating margin up 120 bps to 16.1%.

Net profit attributable to Grainger increased 18.3% to $570 million, while diluted earnings per share rose 20.5% to $12.01.

The company generated $444 million in operating cash flow and $333 million in free cash flow during the quarter. It returned $341 million to shareholders through dividends and share repurchases.

“Despite ongoing geopolitical uncertainty, we executed well during the second quarter and delivered exceptional service to customers,” Grainger Chairman and CEO D.G. Macpherson said. “Looking ahead, we are increasing our outlook to reflect our strong first half performance and the continued momentum we are seeing across the demand environment.”

Grainger’s daily organic constant-currency sales increased 13.3% in April, 15.2% in May and 12.4% in June.

Volume Becomes the Bigger Growth Driver

Grainger’s High-Touch Solutions – North America segment generated 2Q sales of $3.97 billion, up 11.9% year-over-year and 11.7% on a daily constant-currency basis. Segment operating profit increased 16.5% to $686 million, while operating margin expanded 70 bps to 17.3%.

Within High-Touch Solutions – U.S., volume and product mix contributed 7.4 percentage points of sales growth, while price and customer mix added 4.5 points.

That represents a notable shift from 1Q, when volume and product mix contributed 4.6 points and price and customer mix added 5.3 points. Pricing remained a considerable component of Grainger’s growth, but the larger volume contribution provides stronger evidence that underlying purchasing activity improved during the quarter.

Growth also remained healthy across customer sizes. Daily sales to large customers increased 12% after growing 14% in 1Q, while mid-sized customer growth accelerated from 14% to 15%.

Among High-Touch Solutions – U.S. end markets:

• Retail increased in the high-20% range
• Contractors grew in the mid-20% range
• Commercial services, manufacturing and transportation each posted low-double-digit growth
• Government and healthcare each increased in the high-single digits
• Utilities and wholesale each grew in the mid-single digits
• Warehousing remained the lone declining vertical, down in the high-single digits

The manufacturing improvement stands out in particular. The vertical advanced from high-single-digit growth in 1Q to low-double-digit growth in 2Q after spending much of the past several years in a softer demand environment.

Endless Assortment Maintains 20% Organic Growth

Grainger’s Endless Assortment segment — led by Zoro and Japan-based MonotaRO — posted 2Q sales of $1.05 billion, up 13.5% year-over-year and 20.6% on a daily organic constant-currency basis.

Zoro’s daily sales increased 18.4%, while MonotaRO grew 24.0% in local selling days and constant currency.

Segment operating profit jumped 31.5% to $121 million, with operating margin expanding 160 bps to 11.5%. Gross margin increased 90 bps to 30.7%, aided by favorable product mix, a change to Zoro’s discount strategy and tariff refunds.

Endless Assortment’s registered-user base increased 10% year-over-year to 18.3 million. Meanwhile, Zoro reduced its active SKU count by 4% to 13.3 million as part of what Grainger described as an optimization effort to improve customer experience.

Tariff Refunds Provide Most of the Margin Lift

Grainger’s companywide gross margin expansion included a $43 million benefit from refunds on International Emergency Economic Powers Act tariffs paid on products it directly imported. Those refunds reduced cost of goods sold and added approximately 90 bps to gross margin.

That means the refunds accounted for most of Grainger’s 100-bps companywide gross margin expansion. The benefit helped offset tariff costs absorbed in prior periods, along with current-year freight headwinds.

High-Touch Solutions – North America gross margin increased 80 bps to 41.8%, reflecting the tariff refunds and favorable product mix. Those gains were partly offset by higher freight costs and headwinds involving certain private-label products. Excluding the refunds, the segment’s price-cost relationship was roughly neutral.

Endless Assortment gross margin increased 90 bps to 30.7%, while Zoro’s gross margin expanded 120 bps to 34.5%.

Grainger said a net-neutral pricing action implemented in May reflected Section 122 tariffs largely offsetting the rollback of certain IEEPA tariffs.

The company expects another pricing action in September to address higher petrochemical input costs associated with the Middle East conflict, particularly for safety and PPE products such as nitrile gloves. Grainger also plans to offset continued fuel and freight headwinds and account for updates to Section 232 and Section 301 tariffs.

Management expects the September actions to address most currently known cost increases.

Outlook Raised Again

As it did after 1Q26, Grainger raised its full-year outlook alongside the strong 2Q results, citing its first-half performance, continued execution and improving MRO market demand.

The company now expects:

• Sales of $19.4-$19.7 billion, up from its previous $19.2-$19.6 billion range
• Reported sales growth of 8.4%-10.0%, up from 6.7%-9.1%
• Daily organic constant-currency sales growth of 11.5%-13.0%, up from 9.5%-12.0%
• Gross margin of 39.3%-39.6%, up from 39.2%-39.5%
• Operating margin of 15.8%-16.2%, up from 15.6%-16.0%
• Diluted adjusted EPS of $45.50-$47.25, up from $44.25-$46.25

Grainger also raised its operating-margin outlook for both segments. High-Touch Solutions – North America is expected to deliver 17.2%-17.6%, while Endless Assortment is projected at 10.4%-10.8%.

The updated guidance assumes no changes to tariff rates in effect as of Aug. 3.

Meanwhile, Grainger’s new Northwest distribution center began outbound operations in July and is expected to ramp throughout the second half of 2026.

MDM Analysis

Grainger’s 2Q results strengthened the demand signal that emerged in 1Q. The most important change was within its core U.S. business, where volume and product mix supplied 7.4 percentage points of growth compared with 4.5 points from price and customer mix. That reversal from 1Q indicates Grainger’s acceleration was increasingly supported by higher purchasing activity rather than inflation alone.

The breadth was equally encouraging. Nearly every major end market grew, manufacturing advanced at a double-digit pace and mid-sized customer growth accelerated further. Warehousing remained the clear exception.

Still, the margin results require context. IEEPA tariff refunds supplied 90 bps of Grainger’s 100-bps gross margin expansion and shouldn’t be viewed as a recurring source of profitability. Planned September pricing also shows that distributors continue to face higher product, fuel and freight costs despite improving demand.

Overall, Grainger’s results point to a healthier MRO market entering the second half — one in which volume is recovering, but pricing discipline and cost management remain essential.