second quarter 2026
Filed Aug 4, 2026Grainger reports second-quarter sales growth of 10.3%, operating-margin expansion of 120 basis points, diluted EPS growth of 20.5%, and increases full-year 2026 outlook.
Sales, operating earnings, net earnings and diluted EPS all increased year over year, while gross profit margin and operating margin expanded. The Company also raised its full-year 2026 sales, margin and diluted EPS guidance ranges.
Actuals vs. the company’s prior outlook
from its previous release| Metric | Guided | Reported | Verdict |
|---|---|---|---|
| Net Sales | $19.2 - $19.6 billion | $5,021 million | n/a |
| Sales growth | 6.7% - 9.1% | 10.3% | above |
| Daily, organic constant currency sales growth | 9.5% - 12.0% | 13.7% | above |
| Gross Profit Margin | 39.2% - 39.5% | 39.5% | in line |
| Operating Margin | 15.6% - 16.0% | 16.1% | above |
| Diluted Earnings per Share | $44.25 - $46.25 | $12.01 | n/a |
| Operating Cash Flow | $2.2 - $2.4 billion | $444 million | n/a |
| CapEx (cash basis) | $0.55 - $0.65 billion | $111 million | n/a |
| Effective Tax Rate | ~25.0% | 24.8% | in line |
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net SalesGAAP | $5,021 million | – | 10.3% |
| Daily, organic constant currency sales growthother | 13.7% | – | 13.7% |
| Gross ProfitGAAP | $1,984 million | – | 13.0% |
| Gross Profit MarginGAAP | 39.5% | – | 100 bps |
| Operating EarningsGAAP | $807 million | – | 19.0% |
| Operating MarginGAAP | 16.1% | – | 120 bps |
| Net Earnings Attributable to W.W. Grainger, Inc.GAAP | $570 million | – | 18.3% |
| Diluted Earnings Per ShareGAAP | $12.01 | – | 20.5% |
| Effective Tax RateGAAP | 24.8% | – | (160) bps |
| Cash flow from operating activitiesGAAP | $444 million | – | – |
| Capital expendituresother | $111 million | – | – |
| Free cash flowother | $333 million | – | – |
| IEEPA tariff refunds reducing cost of goods soldGAAP | $43 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| High-Touch Solutions - N.A.Sales growth was driven by volume growth and price inflation as tariff costs are passed. Sales increased 11.7% on a daily, constant currency basis. | not reported | – | 11.9% |
| Endless AssortmentGrowth was driven by strong performance at both MonotaRO and Zoro. Sales increased 20.6% on a daily, organic constant currency basis. | not reported | – | 13.5% |
2026 outlook
- Revenue$19.4 - $19.7 billion
- Gross margin39.3% - 39.6%
- Tax rate~25.0%
- NoteSales growth: 8.4% - 10.0%
- NoteDaily, organic constant currency sales growth: 11.5% - 13.0%
- NoteOperating Margin: 15.8% - 16.2%
- NoteDiluted Earnings per Share: $45.50 - $47.25
- NoteOperating Cash Flow: $2.25 - $2.4 billion
- NoteCapEx (cash basis): $0.575 - $0.65 billion
- NoteShare Buyback: $0.975 - $1.05 billion
- NoteHigh-Touch Solutions - N.A. Segment Operating Margin: 17.2% - 17.6%
- NoteEndless Assortment Segment Operating Margin: 10.4% - 10.8%
Capital returns
- Returned $341 million to Grainger shareholders through dividends and share repurchases.
- Share Buyback guidance: $0.975 - $1.05 billion.
What drove it
- Total sales increased 10.3%, or 13.7% on a daily, organic constant currency basis after normalizing for the Company's exit from the U.K. market and foreign currency exchange.
- High-Touch Solutions - N.A. growth reflected volume growth and price inflation as tariff costs are passed.
- Endless Assortment growth reflected strong performance at both MonotaRO and Zoro.
- Gross profit margin benefited from strength from both segments and the Company's exit from the U.K. market.
- IEEPA tariff refunds for products directly imported by Grainger reduced cost of goods sold by $43 million.
- Operating-margin expansion reflected gross-margin improvement in both segments, sales leverage improvement in Endless Assortment, and a benefit related to the Company's exit from the U.K. market.
- Diluted EPS growth reflected strong operating performance and fewer shares outstanding.
Concerns
- High-Touch Solutions - N.A. gross profit margin faced unfavorable freight and headwinds from certain private label products.
- The effective tax rate increased to 24.8% from 23.2%, primarily due to decreased tax credit activity and the impact of tax legislation effective in 2026.
- Operating cash flow was partly offset by unfavorable working capital.
- Diluted EPS growth was partly offset by a higher effective tax rate.
What to watch
- Whether daily, organic constant currency sales growth remains within the updated 2026 guidance range of 11.5% - 13.0%.
- Whether gross profit margin remains within the updated 2026 guidance range of 39.3% - 39.6% after the $43 million IEEPA tariff refund benefit.
- High-Touch Solutions - N.A. margin performance amid unfavorable freight and private label product headwinds.
- Endless Assortment sales leverage and performance at MonotaRO and Zoro.
- Working-capital effects on the updated operating cash flow guidance range of $2.25 - $2.4 billion.
Balance sheet and cash flow
- Generated $444 million of cash flow from operating activities as net earnings were partly offset by unfavorable working capital.
- Invested $111 million in capital expenditures.
- Free cash flow was $333 million.
Analysis
Grainger reported a strong second quarter of 2026, with net sales of $5,021 million rising 10.3% from $4,554 million. On a daily, organic constant currency basis, sales increased 13.7% after normalizing for the Company's exit from the U.K. market and foreign currency exchange. High-Touch Solutions - N.A. sales increased 11.9%, supported by volume growth and price inflation as tariff costs are passed. Endless Assortment sales increased 13.5%, with strong performance at both MonotaRO and Zoro.
Profitability improved faster than sales. Gross profit increased 13.0% to $1,984 million and gross profit margin expanded 100 basis points to 39.5%. The Company said margin strength came from both segments and the U.K. market exit. Results also included $43 million of IEEPA tariff refunds that reduced cost of goods sold. In High-Touch Solutions - N.A., gross profit margin reached 41.8%, up 80 basis points, though unfavorable freight and certain private label products partly offset the tariff-refund and mix benefits.
Operating earnings increased 19.0% to $807 million, and operating margin rose 120 basis points to 16.1%. The Company attributed the margin increase to segment gross-margin improvement, sales leverage in Endless Assortment and the U.K. exit benefit. Net earnings attributable to W.W. Grainger, Inc. rose 18.3% to $570 million, while diluted EPS increased 20.5% to $12.01. Strong operating performance and fewer shares outstanding supported EPS, partly offset by a higher effective tax rate of 24.8% versus 23.2%.
Cash generation remained positive but reflected working-capital pressure. Operating cash flow was $444 million as net earnings were partly offset by unfavorable working capital. After $111 million in capital expenditures, free cash flow was $333 million. The Company returned $341 million to shareholders through dividends and share repurchases.
Management increased full-year 2026 guidance across sales, margins and diluted EPS. The updated net-sales range is $19.4 - $19.7 billion, with daily, organic constant currency sales growth of 11.5% - 13.0%, gross profit margin of 39.3% - 39.6%, operating margin of 15.8% - 16.2%, and diluted EPS of $45.50 - $47.25. The updated outlook indicates that management is carrying strong first-half performance and continued demand momentum into the balance of 2026, while maintaining an effective tax rate outlook of ~25.0%.
Management, verbatim
Despite ongoing geopolitical uncertainty, we executed well during the second quarter and delivered exceptional service to customers. Sales remained strong and core operating profitability was in line with expectations.
D.G. Macpherson, Chairman and CEO
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.
D.G. Macpherson, Chairman and CEO
Not in the filing
stated, not guessed- Period-end date.
- Segment revenue for High-Touch Solutions - N.A.
- Segment revenue for Endless Assortment.
- High-Touch Solutions - N.A. operating margin for the second quarter of 2026.
- Endless Assortment operating margin for the second quarter of 2026.
- Prior-quarter comparisons for reported key metrics.
- Operating expenses.
- Cash balance.
- Debt balance.
- Separate dividend amount.
- Separate share repurchase amount.
- Actual second-quarter share buyback amount.
- Actual second-quarter segment operating margins needed to compare with prior guidance.
- Actual second-quarter capex on the cash basis used in guidance.
- Actual second-quarter operating cash flow, net sales and diluted EPS are not comparable with full-year prior-guidance ranges.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.