Grainger — No. 1 on MDM’s Top Distributors Lists for industrial, MRO and safety supplies — reported its 2025 second quarter financial results on Aug. 1, which showed a continued acceleration in organic sales, but a narrowed full year outlook impacted by tariff headwinds.

2Q Highlights

• 2Q sales of $4.6 billion were up 5.6% year-over-year, with daily, constant currency-based sales up 5.1%. That latter growth is up sequentially from 1Q’s 4.4%.
• Gross margin of 38.5% fell 80 basis points year-over-year and fell 120 points from 1Q, which the company attributed to tariff-related impacts that include a last-in, first-out (LIFO) inventory valuation headwind. Excluding LIFO, gross margin percentage was down only slightly year-over-year.
• Operating margin of 14.9% dipped 20 points from a year earlier and trailed 1Q’s 15.6%
• Net profit of $482 million improved 4.8% year-over-year and narrowly topped 1Q’s $479 million.
• On the tariffs front, Grainger’s 2Q presentation noted it took initial pricing actions in May — largely representing increases on products the company directly imported. Grainger is taking additional pricing actions in September that represent direct imports and supplier-imported products where cost negotiations are final. The company expects further tariff-driven headwinds in 3Q.

In the Store: MDM’s U.S. MRO Market Trends Report 

MDM Case Study: MSC Industrial Supply (Premium access here) 

2Q Sales Breakdown

High-touch Solutions – N.A.:

• Sales of $3.54 billion were up 2.5% year-over-year, with daily, constant currency-based sales up 2.8%.
• Gross margin of 41.0% decreased 70 bps year-over-year but was closer to flat when excluding the LIFO headwind. Sequentially, margin was down 140 bps from 1Q.
• Operating margin 16.6% was down 90 bps year-over-year and down 110 bps from 1Q

Endless Assortment:

• Sales of $929 million jumped 19.7% year-over-year, with daily, constant currency-based sales up 16.3%. Daily sales at Zoro increased 20.0% year-over-year, and MonotaRO sales grew 16.4% on a local days, local currency basis.
• Gross margin of 29.8% increased 30 bps year-over-year and 20 bps from 1Q, with Grainger noting a continued benefit from strategic pricing actions
• Operating margin of 9.9% jumped 200 bps year-over-year, including a 380-point spike at Zoro due to gross margin flow-through and top-line leverage, while MonotaRO saw a 60-point increase

2Q Sales Growth by Customer End Market

• Commercial Services – Up low-single digits
• Contractors – Up high-single digits
• Government – Up low-single digits
• Healthcare – Up mid-single digits
• Manufacturing – Up low-single digits
• Retail – Down mid-single digits
• Transportation – Up high-single digits
• Utilities – Down mid-single digits
• Warehousing – Down mid-single digits
• Wholesale – Flat
• Other – Up high-single digits

Updated 2025 Guidance

In updating and narrowing its 2025 full-year outlook, Grainger increased its sales guidance but lowered its margin expectations.

In an analyst note, Baird’s Equity Research Industrial Distribution unit provided the following analysis of Grainger’s 2Q results:

“While the execution optically looks disappointing compared to the benefits some peers are seeing from tariff pricing, some of this reflects simply accounting mechanics (LIFO), and GWW is taking additional pricing actions in September to begin approaching price/cost neutrality exiting the year/into 2026. Overall, the underlying business appears to be performing as expected despite the tariff price/cost hiccup on the quarter/guide.”