MRO and other industrial supplies distribution giant Grainger reported its 2024 first quarter financial results on April 25, showing a continued modest deceleration in sales growth against tougher comparables, while margins improved sequentially.

Chicago-based Grainger posted 1Q total sales of $4.235 billion, up 3.5% year-over-year, with daily, organic sales up 4.9%.

Here’s how the overall and daily, organic sales figures have looked since the start of 2023:

It’s important to note the context that most of 2023’s sales figures had the tailwind benefits of inflationary impacts, especially in 1Q and 2Q.

Grainger’s 1Q24 gross margin was 39.4%, down 50 basis points year-over-year and up 30 points from 4Q23. The company’s 1Q24 operating profit of $669 million dipped 1.6% year-over-year, with operating margin of 15.8% down 80 bps year-over-year and up 190 bps from 4Q23.

Grainger had a 1Q24 net profit of $478 million, down 2.0% year-over-year and up 21.0% from 4Q23.

“We’ve produced solid results amidst a slow, but steady demand environment,” Grainger Chairman and CEO D.G. Macpherson said in the company’s financial news release. “Looking to the remainder of the year, we are well-positioned to achieve our guidance outlook as we work to provide a flawless experience and deliver tangible value for our customers.”

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Business Unit Performance

Within Grainger’s two business units in 1Q24:

• High-Touch Solutions – N.A.: 1Q daily sales were up 3.4% year-over-year, with growth in all geographies. Gross margin of 41.8% fell 60 bps, which the company attributed to negative price/cost spread due to timing and the lap of one-time freight adjustments in 2023. 1Q operating margin of 17.9% fell 100 bps.
• Endless Assortment: 1Q daily sales were up 3.7% year-over-year, or 10.0% on a daily, constant currency basis. Grainger said revenue growth in the segment was driven by core customers at Zoro and enterprise customers at MonotaRO, partially offset by a continued decrease in Zoro non-core customers. Gross margin of 29.3% fell 30 bps, which the company attributed to unfavorable product mix at Zoro. Operating margin of 7.9% dipped 20 bps.

Customer End Markets

Here’s how Grainger’s 1Q24 year-over-year sales growth fared by customer end market, according to the company’s financials presentation:

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

2024 Outlook

In updating its 2024 full-year outlook, Grainger reaffirmed its sales guidance range of $17.2-$17.7 billion that it issued in its 4Q23 report, which would be up 4.3%-7.3% vs. 2023. The company now expects daily, organic sales growth of 4.3%-7.3%, up from 4.0%-7.0% in the previous outlook.

Grainger forecasts full-year 2024 gross margin of 39.1%-39.4% and operating margin of 15.3%-15.8% — both identical to the previous outlook.

Shareholders Elect 13 Directors

A day earlier, Grainger held its annual shareholders meeting in Lake Forest, IL, in which Macpherson provided a company update that included financial and operational highlights from 2023. Afterward, the company announced that its shareholders elected the following 13 members for its 2024-2025 Board of Directors:

• Rodney C. Adkins
• Neil S. Novich
• George S. Davis
• Beatriz R. Perez
• Katherine D. Jaspon
• E. Scott Santi
• Christopher J. Klein
• Susan Slavik Williams
• Stuart L. Levenick
• Lucas E. Watson
• D.G. Macpherson
• Steven A. White
• Cindy J. Miller

All except Miller were 2023-2024 board members.