Grainger Raises 2026 Profit Outlook To $47.00-$48.00 A Share After Third-Quarter Sales Climb 11.3%
The industrial supplier lifted its full-year adjusted earnings range from $45.50 to $47.25 as both of its business segments grew.
Grainger, which distributes maintenance, repair and operating supplies to businesses, raised its 2026 adjusted earnings forecast to $47.00 to $48.00 a share from $45.50 to $47.25, after third-quarter sales of $5.2 billion rose 11.3%. The company reported the results Wednesday.
A quarter of double-digit growth
Sales grew 14.9% on a daily, organic constant currency basis, a measure that strips out the exited U.K. business and currency swings. Adjusted diluted earnings were $12.54 a share, up 22.8%. Reported earnings of $12.42 rose 102.9%, helped by a year-earlier quarter that carried a loss from Grainger's exit of the U.K. market.
Adjusted operating margin was 16.1%, up 90 basis points (0.9 percentage points). The company credited sales leverage in both segments and a benefit related to the U.K. exit.
"The third quarter performance reflects our consistent execution and an improving demand environment," Chairman and CEO D.G. Macpherson said. He added that the company remains "on track for an exceptional year."
Both segments pull their weight
High-Touch Solutions North America, which serves mid-size and large customers through sales representatives, branches and on-site inventory, grew sales 13.8%. Double-digit volume growth and continued price inflation, as cost increases were passed through, drove it. Its gross margin slipped 30 basis points to 40.8% on freight expense and mix.
Endless Assortment, the online business built on Zoro in the US and MonotaRO in Japan, grew sales 11.9% as reported, or 19.3% on a daily, organic constant currency basis. Its gross margin rose 90 basis points.
Cash and the new guidance
Operating cash flow was $661 million. After $115 million of capital spending, free cash flow was $546 million. Grainger returned $396 million to shareholders through dividends and buybacks.
The updated 2026 outlook is on an adjusted basis:
- Net sales of $19.8 billion to $20.0 billion, from $19.4 billion to $19.7 billion.
- Operating cash flow of $2.35 billion to $2.45 billion, from $2.25 billion to $2.4 billion.
- Operating margin of 16.0% to 16.2%, from 15.8% to 16.2%.
- Endless Assortment segment operating margin of 10.9% to 11.1%, from 10.4% to 10.8%.
Macpherson and Interim CFO Laurie Thomson discussed the quarter on a call at 11:00 a.m. ET Wednesday.
