W.W. Grainger Inc. grew sales at the end of 2025 and for the full year, but profit declined as costs, taxes and business mix worked against the company during a year marked by uneven demand across its operations.
The industrial distributor reported fourth-quarter sales of $4.425 billion, up from $4.233 billion a year earlier. For the full year, sales reached $17.942 billion, up from $17.168 billion in 2024.
Grainger recorded fourth-quarter net earnings of $451 million, down from $475 million in the same period a year earlier. For the year, net earnings fell to $1.706 billion from $1.909 billion in 2024. Earnings per share followed the same pattern, declining in both the quarter and the full year.
Company leaders said the results reflect a business that continued to gain customers and grow, but faced higher operating costs, tariff-driven product inflation, and a tougher tax comparison than the prior year. Profit was also affected by the company’s decision earlier in 2025 to exit the United Kingdom, where it sold its Cromwell business and closed Zoro U.K.
CEO D.G. Macpherson said Grainger made progress in a difficult environment.
“Despite a challenging macro environment, we drove profitable share gain, made strong progress with our strategic initiatives, and operated with resiliency,” Macpherson said in the earnings statement.
Two very different growth stories inside Grainger. The results again showed a clear divide inside Grainger’s business.
Its traditional North American operation — the branch-based model that serves factories, contractors and facilities with local inventory and field sales support — grew modestly. Sales in this segment increased just over 2% in the quarter and for the year.
By contrast, the company’s digital businesses grew at a much faster pace. Grainger’s Endless Assortment segment, which includes online platforms Zoro in North America and MonotaRO in Japan, grew more than 14% in the quarter and 16% for the year.
Those online businesses now account for most of the company’s growth and helped offset slower expansion in the core High-Touch operation.
At the same time, that shift in where growth is happening changed the company’s overall profit picture. The digital units operate with a different cost structure than the branch business, and as they represent a larger share of sales, overall margins were affected.
Grainger said several factors combined to squeeze profit during the year:
- Higher healthcare and operating expenses
- Tariff-related increases in product costs.
- Delays between when product costs rose and when selling prices caught up.
- Inventory valuation effects tied to inflation.
- A higher tax rate compared with 2024.
Gross profit as a percentage of sales dipped slightly in both the quarter and the year. Operating profit as a share of sales fell more noticeably, especially compared with 2024.
A significant part of the year-over-year earnings decline also came from taxes. In late 2024, Grainger benefited from a one-time tax reserve release that did not repeat in 2025, making this year’s comparison look worse.
During 2025, Grainger completed its exit from the United Kingdom. The company sold its Cromwell industrial supply business and closed Zoro U.K., a move it had announced earlier in the year.
The financial impact of that decision showed up in full-year results and reduced reported earnings.
When those costs are set aside, Grainger said underlying performance was steadier, with earnings slightly higher than the year before on an adjusted basis.
Even with lower profits, Grainger continued to generate strong cash flow from operations. The company produced just over $2 billion in operating cash during the year and returned $1.5 billion to shareholders through dividends and stock repurchases.
Grainger also invested heavily in facilities, technology, and operations, spending $700 million on capital projects.
Grainger’s outlook for 2026 calls for both faster growth and a rebound in profitability.
The company expects sales to approach $19 billion and projects stronger margin performance across both its branch-based and digital operations. Earnings per share are expected to rise meaningfully if those plans hold.
Grainger also expects the Endless Assortment business to continue expanding at a faster pace than the High-Touch operation, reinforcing the shift underway inside the company.
Grainger’s 2025 results show a company in transition. The core business — serving customers through branches, field sellers, and local inventory — remains large, stable, and profitable, but growth there is modest. The faster expansion is happening in digital marketplaces built for search-driven, self-service purchasing.
That mix shift, combined with tariffs, higher costs and tax comparisons, made 2025 a year when sales climbed but profit fell.
For Grainger, the year was less about weakness and more about the realities of operating in a changing cost environment while the structure of the business itself continues to evolve.
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