The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

This year's 100 Best Companies to Work For are rebuilding the social contract at work so people feel supported, trusted, and future-ready as they undergo that transition.

DEI-BRG

Employees say:"Our CEO not only lives our core principles but ensures that we hold strong to those principles no matter the political or economic climate. I have worked for corporate companies prior to Grainger, and the overall feeling of connectiveness to each other, to community, and to self, is one that I had not experienced prior. I feel at home with Grainger."

Fortune 100 Best Companies to Work For

The companies on this annual list make a conscious effort to be supportive, inclusive workplaces.

2025 Best Large Workplaces for Women_W.W. Grainger, Inc._US1__68a71dfc383bc91cadd06a7f_6

Employees say:"The team culture is unmatched! Everyone is welcoming, willing to step out of their way to help you, and you can always assume good intent from others. Additionally, our leadership strongly values the differences of its team members—above and beyond anything I've seen from other organizations—by ensuring an open space for them to be themselves at work and celebrate the things that make them unique and special."

100 Best Large Workplaces for Women

Fortune partnered with Great Place to Work to analyze survey feedback representing nearly 62,000 U.S. employees.

Best Workplaces_Chicago_Large_2025-Grainger_US1__67fd6226d94556dd4465c985_2

Employees say:"For me Grainger is an amazing place to work. I can honestly say that both my team and manager care about me, they want to see me succeed at work and my personal life. My team is like an extension of my family. There are so many opportunities for employees here at Grainger—you can move up, move over, or move around to find that position that works best for you. My job/career means a lot to me, and this is where I plan to work until I retire. I tell my friends and family how great it is here and if they are ever looking for a new career/job to come work here because they will also love it as much as I do."

15 Best Large Workplaces in Chicago

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Fortune 500

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

Fortune partners with global people analytics firm Great Place to Work to analyze survey feedback representing employees from companies across the U.S.

GPTW-Millennials-Large-2024-Grainger

Employees say:"Our culture is one that is very special and not like other places I've worked. From our opportunities for advancement, a culture of recognition, individual team cultures, the collaborative nature, the focus on DEI, BRG involvement, and volunteer opportunities, it's my home."

100 Best Large Workplaces for Millennials

Industries included in the sector are diversified, electronics, and food and grocery.

Fortune Sector Leaders: Wholesalers

Fortune partnered with Great Place to Work to analyze survey feedback representing nearly 50,000 U.S. employees.

GPTW 2024 Chicago Large-Grainger_US1__20240410151431_3

Employees say: "Everyone here makes you feel like you are family - This is something the other companies "try" to achieve but Grainger makes it happen from the get-go. I am VERY proud and blessed to be working with my Grainger Family."

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

Creating a more empathetic workplace looks like staying loyal to workers, emphasizing D&I initiatives, and paying well.

100 Best Companies 2024-Grainger

Grainger is the country’s leading distributor of maintenance, repair, and supplies for industries like hardware, lighting, and plumbing. Established in 1927, the company now operates the 11th largest online e-commerce site by revenue. &nbsp;Grainger is building two new distribution centers in the U.S., and is adding 3.5 million square feet to its supply chain network for a more than 35% increase in overall warehouse space. &nbsp;In 2022, the company trained all of its team members in a DEI learning course, focusing on unconscious bias and how it emerges in day-to-day work. It aims to have half of its senior leadership roles filled by women by 2030. Currently, its CEO’s leadership team is 43% women while 29% is racially diverse.&nbsp;

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

Building a culture of trust and transparency is essential to help everyone thrive, especially in rocky economic times.

100 BEST COMPANIES 2023-Grainger

This long-standing industrial supply company is adapting to the changing times with an emphasis on diversity. 
<ul> 
 	<li>In the last year, Grainger implemented a technology tool to remove noninclusive language from over 400 job postings; after the revisions went live, the pool of female applicants increased by 15%.</li> 
 	<li>A mandatory e-learning course for leaders tackles unconscious bias, including how it may emerge in day-to-day work and behaviors for managing it.</li> 
 	<li>Senior leadership values transparency, holding monthly calls with all employees to address questions ranging from business operations questions to U.S. Supreme Court decisions to employee compensation.</li> 
 	<li>“Every team member I have encountered during my time at Grainger so far is caring and willing to help each individual succeed,” said one worker. “You are welcomed with open arms, work together as one team, and [colleagues are] willing to help you develop professionally and personally.”</li> 
</ul>

The 300 companies on this list are transforming industries from the inside out.

GPTW Chicago 2023-Grainger

Employees say: 
 
"Grainger does a fantastic job of making sure everybody is able to show up as their true selves. There are multiple BRGs that people can join to feel more connected and informed. Grainger also does a really awesome job of supporting individuals' desires to grow professionally, and offers numerous courses that you can take to grow in your skillset while gaining new knowledge."

GPTW Women 2023-Grainger

Employees say: 
 
"Grainger is the best company I've ever worked for. They go above and beyond to be inclusive to all of our team members. They genuinely seek out feedback from their team members and actually take action on that feedback whenever possible. We're provided more benefits than most other companies and are also paid fairly for the work we do."

Fortune partnered with Great Place to Work to analyze survey feedback representing nearly half a million U.S. employees.

GPTW Millennial Large 2023-Grainger

Employees say: 
 
"Senior leadership invests a lot of time in being transparent about the company’s direction. They strive to foster an inclusive environment, and they genuinely care about the employees. This culture has led to a stronger frontline leadership team. That makes all the difference in wanting to remain with Grainger and knowing it is a great place to work!"

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

When it comes to supporting employees, flexibility, diversity, and a few extra paid days off go a long way.

100-Best-2022-Grainger

This industrial supplies company has appeared on the Best Companies list five times thanks to its emphasis on employee training and its focus on corporate inclusivity. From each team member’s first day, Grainger offers a variety of professional learning opportunities, skills training courses, and leadership programs. Employees spent an average of six hours last year on these supplemental trainings. “I feel that the company never lacks development opportunities,” says one staffer. “It is a main focus of every manager I have worked with so far, having been offered the opportunity to participate in classes and get involved with projects that align to my interests.” Additionally, the company is invested in its diversity efforts, conducting pay equity audits each year and aiming for 50% of its leadership team to be women by 2030.

Winning workplaces in Chicagoland earned high marks from employees when it comes to leadership.

GPTW Chicago Large 2022-Grainger

Employees say: 
 
“They provide tremendous resources that encourage growth and development—leaders want us to succeed. The company authentically celebrates and champions diversity, inclusion, and equality. The company also memorialized a 10-year commitment to reduce greenhouse gas emissions.” 
 
Read the Great Place to Work review .

GPTW Women 2022-Grainger

Employees say: 
 
“Grainger is unique in that it celebrates all of its employees, all the way from the CEO to the warehouse team members. Everybody is represented and respected here. The pay is above average, not just for the industry but in general. The benefits offered are excellent and add great value to working here. Grainger values talent and ideas at all levels and in my experience has made great strides in growing based on ideas from Team Members or management. There is a great potential for growth within Grainger and I would highly recommend it to anyone looking for a career to grow into.”

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-258-W.W. Grainger

Typically selling to other businesses rather than retail, the supply company sells industrial tools and equipment for heavy machinery, plumbing, tools, and other business needs.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-278-WW-Grainger

The industrial supply company distributes maintenance, repair, and operating equipment to businesses around the world.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Best Companies

Rank last year

Years on list

U.S. employees

U.S. job openings

Year founded

Benefits

Subsidized childcare

Compressed work weeks

Option to work remotely

Minimum requirement in-office attendance (days per week)

Mental health coverage

Free mental health sessions (per year)

Free backup childcare time off (days)

Maximum $ amount covered for fertility services

Fully paid maternal leave (days)

Fully paid paternal leave (days)

Fully paid adoptive leave (days)

Maternal leave in addition to regular time off (days)

Paid days off for volunteering

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Best Workplaces In Chicago

Founded

Sites

Best Workplaces For Women

Industry Vertical

# Work Sites

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Strongest Dimension

Previous rank

State

Grainger is an industrial-supply distribution company, focused on safety, security, and storage equipment, along with cleaning, metalworking, and hand tools. As of 2025, it offers over 30 million products to some 4.5 million customers worldwide, but its services are primarily in North America, Japan, and the United Kingdom. The company was founded in 1927.

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

W.W. Grainger (GWW): Company Profile, Stock Price, News, Rankings

legacy

W.W. Grainger

w.w. grainger

Greetings and welcome to the W.W. Grainger first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Kyle Bland, Vice President of Investor Relations. Thank you. You may begin.

Good morning. Welcome to Grainger's first quarter 2026 earnings call. With me are D.G. Macpherson, Chairman and CEO, and Dee Merriwether, Senior Vice President and CFO. As a reminder, some of our comments today may include forward-looking statements that are subject to various risks and uncertainties. Additional information regarding factors that could cause actual results to differ materially is included in the company's most recent Form 8-K and other periodic reports filed with the SEC. This morning's call includes non-GAAP financial measures, which reflect certain adjustments in previous periods as noted in the presentation. There were no adjusting items in the first quarter 2026 period.

We have also included organic revenue adjustments in the presentation, which normalize sales growth to reflect our exit from the U.K. market, including the Cromwell divestiture and the closure of Zoro U.K., both of which are completed in the fourth quarter of 2025. Definitions and full reconciliations of our non-GAAP financial measures with our corresponding GAAP measures are found in the tables at the end of this presentation and in our earnings release, both of which are available on our IR website. We'll also share results related to MonotaRO. Please remember that MonotaRO is a public company and follows Japanese GAAP, which differs from U.S. GAAP and is reported in our results one month in arrears. As a result, the numbers discussed will differ from MonotaRO's public statements. Now I'll turn it over to D.G.

Thanks, Kyle. Good morning, everyone. Thank you for joining today. We're off to a strong start in 2026 with both our business segments performing well. Despite the ongoing tariff uncertainty and the broader geopolitical climate, we are encouraged by the positive signals we're seeing in the demand environment. By staying focused on what we can control, we continue to drive performance through solid execution and by consistently delivering value to our customers. I had the opportunity to experience this firsthand on a recent visit with a major agricultural customer. While many of our large customers are complex, our approach is simple. Start with the customer, stay curious about how their operation works, then bring our full suite of capabilities to solve their MRO challenges end to end.

What differentiated Grainger with this customer, and with other contract customers where we are seeing growth, is our ability to deliver highly coordinated capabilities beyond the products themselves. That same coordinated approach was on display at our most recent Grainger sales meeting in March. This event showcased the breadth of our products, services, and solutions. With more than 10,000 customer, supplier, and team member attendees, the event demonstrated the power of listening, asking good questions, and staying focused on the problem the customer is trying to solve. We invest in this meeting because it results in stronger teams, stronger partnerships, and ultimately improved performance. Earning trust and building strong relationships is also at the core of how we approach our workplace and culture. While awards aren't the goal, they serve as useful signals that we're executing the right way.

In recent weeks, Grainger was once again recognized as a top workplace, this time being named one of the Fortune 100 Best Companies to Work For and a 2026 Platinum Employer on the Where You Work Matters list, which is powered by the American Opportunity Index. We don't take this recognition like this for granted, and we're proud that it reflects the experiences we create for team members and the outcomes we deliver to our stakeholders. On the subject of team members, you may have seen that several of our senior leaders recently took on new roles within the organization. We are fortunate to have a broad and deep set of leaders at Grainger, a clear strategy and high-performing company. Having such a strong foundation allows us to provide leaders with new experiences to develop for the future. Moving to Q1 results.

We delivered a strong quarter of profitable growth, meaningfully outpacing the expectations we communicated for the company back in February. Results benefited from healthy price realization, strong operational execution across both segments, and improved market demand. The broader MRO market showed positive momentum as we moved through the quarter and appears to have sustained that strength in April. At the same time, our High-Touch growth engines are gaining traction, and the EA segment is continuing to power the flywheel. Total company-reported sales for the quarter were up 10.1% or 12.2% on a daily organic constant currency basis. Operating margin was strong at 16.7%, and diluted EPS finished the quarter up over 18%.

Operating cash flow came in at $739 million, which allowed us to return a total of $345 million to Grainger shareholders through dividends and share repurchases. I also want to mention that we recently announced a 10% increase to our quarterly dividend, marking the 55th consecutive year of dividend increases. This reflects our continued commitment to returning cash to shareholders through a balanced and return-focused approach. Overall, the quarter finished ahead of expectations, and we are increasing our 2026 guidance to reflect the strong start and continued momentum we are seeing. I will now turn it over to Dee.

Thanks, D.G. As mentioned, we had a great start to the year, with total company sales up 10.1% or 12.2% on a daily organic constant currency basis, which included strong growth across High-Touch Solutions and Endless Assortment. Gross margin for the quarter was healthy at 40%, up 30 basis points versus the prior year period, as we saw expansion in both segments.

Operating margin was up 110 basis points year-over-year as gross margin flow-through and leverage in both segments helped drive results. Both gross margin and operating margin benefited from the exit of the U.K. market. Overall, we delivered diluted EPS for the quarter of $11.65, which was up 18.2% versus the first quarter of 2025. Moving to segment level results. The High-Touch Solutions segment delivered sales growth of 10.5% on a reported basis or 10% on a daily constant currency basis. Sales growth included roughly equal contributions from price and volume. From an end market perspective, we believe the MRO market demand gained momentum in the period. This view is supported by various market indicators as well as the activity we're seeing on the ground with customers.

For Grainger specifically, we saw broad-based acceleration across end markets with strong contributions from manufacturing, government, and contractor customers. On profitability, gross margin finished the quarter at 42.6%, up 20 basis points versus the prior year as positive mix and freight were partially offset by the impact of the annual Grainger sales meeting. We also continued to experience LIFO inventory valuation headwinds in the quarter. Relative to our verbal guide, gross margin results exceeded expectations for the quarter as price cost was roughly neutral, faring better than anticipated on stronger price realization. We saw cost timing favorability compared to expectations on lower sell-through of certain SKUs within our private label inventory. We anticipate this cost pressure will now hit in the second quarter. On SG&A, we gained nice leverage year-over-year as we benefited from strong sales, productivity, and a tailwind from the Grainger sales meeting.

This more than offset continued marketing investment and higher payroll and benefits expense, including higher incentive-based compensation, given our strong start to the year. This helped drive operating margin for the segment to 18.3% or 60 basis points versus the prior year period. All told, it was a great start for the High-Touch Solutions segment, and we're excited about the momentum we have as we move towards the rest of the year. Now focusing on Endless Assortment segment. Sales increased 19.6% on a reported basis or 21.9% on a daily organic constant currency basis, which normalizes for the closure of the Zoro U.K. business and the impact of foreign currency exchange. Zoro U.S. was up 18.7% on a daily basis, while MonotaRO achieved 24.3% in local days local constant currency.

At a business level, Zoro saw strong growth from its core B2B customers along with improving customer retention rates. The team continued to deliver on core foundational capabilities, improving the customer experience across pricing, fulfillment, and website functionality. At MonotaRO, sales were strong with continued growth from enterprise customers, coupled with solid acquisition and repeat purchase rates with small and mid-sized businesses. Additionally, MonotaRO continued to benefit from an increase in web traffic stemming from a competitor cyber outage, which provided a meaningful tailwind to sales in the period. As expected, this impact waned as we moved through the quarter. On profitability, operating margins increased 190 basis points to 10.6% with favorability across the segment.

MonotaRO margins remained strong at 12.9%, up 90 basis points, and Zoro margin improved to 7.3%, up 210 basis points, with both businesses benefiting from healthy top-line leverage. Overall, another strong quarter for the Endless Assortment team. Before moving on, I wanted to share a brief update on the inflationary environment as we navigate tariffs and geopolitical cost pressures. We continue to manage the business with the goal of maintaining price-cost neutrality over time. With this, we passed further price increases in January in response to previously delayed tariff inflation and to offset annually negotiated cost increases with our suppliers, which were largely in effect as of February 1st. These actions were net of a partial rollback on certain Chinese tariffs announced at the end of last year.

As it relates to the recent Supreme Court ruling on IEEPA tariffs, we are only anticipating a modest impact on the business since the tariff rate differential with prevailing Section 122 duties is minimal. With this, our May pricing actions were net neutral in total. Where we have seen modest cost reductions, namely on products that Grainger is directly importing, we adjusted prices as part of our May update. For the remainder of our assortment, we're working with supplier partners to assess cost reduction opportunities and will take subsequent pricing actions as warranted. Moving forward, the team is busy evaluating further inflationary pressures from recently announced tariff changes and the knock-on effects from the conflict in the Middle East.

On fuel, we're working with our supplier and transportation partners to minimize cost headwinds that have risen as diesel prices remain pressured. We ultimately strive to pass these costs through to customers, but there is some leakage since a number of our customers don't fully pay for partial shipping. While currently only modest in total, these heightened costs are pressuring our margins, and this will likely continue until our next pricing window. We have included this fuel impact in our updated guidance. On the recently announced Section 232 modifications, given the significant complexity, we are still working to understand what the full impact might be across our assortment, but our initial analysis suggests it is likely minimal. Separately, we're starting to see supply pressure from the conflict in the Middle East related to certain raw material inputs on some categories, like nitrile-based gloves.

As of now, this is minimal on the U.S. business, but we're starting to see more strain in the Japanese market, given the region's reliance on energy inputs which move through the Strait of Hormuz. We will continue to assess the situation and are working with our suppliers and manufacturing partners to minimize supply impacts, including changing our sourcing strategy where needed. Despite these challenges, we're not anticipating a step change in cost inflation from these pressures at this time, and thus have not included any impact in our updated guidance. However, if the conflict persists, these impacts could result in incremental costs for the business, and this will be felt more quickly in the U.S., based on LIFO accounting.

Lastly, we're also monitoring for the potential recovery of previously paid IEEPA tariffs where Grainger is the importer of record, but the timing and the magnitude of any recovery remains uncertain at this time. As you might imagine, the broader inflationary landscape remains highly fluid, as it has been for the last several quarters. Importantly, our team is staying agile, and we continue to be confident in our ability to maintain supply for our customers while adhering to our core pricing tenets. Now turning to our guide. As a result of our strong start and continued momentum, we are raising our full-year 2026 guidance. On the top line, our new outlook includes expected daily organic constant currency sales growth between 9.5% and 12%, reflecting first-quarter strength, continued strong execution, and improved MRO market demand.

Our operating margin expectations for the full year have ticked up slightly at the midpoint to incorporate our first quarter outperformance. This is partially offset by headwinds from higher incentive-based compensation and leakage related to increased fuel costs. While incremental margins remain healthy, you'll see that the added revenue dollars for the balance of the year are less profitable because of these transitory headwinds. Taking all this together, EPS is expected to be between $44.25 and $46.25, representing nearly 15% year-over-year growth at the midpoint. This represents a $1.75 improvement at the midpoint versus the prior guidance range. We've also updated our supplemental guidance in the appendix, which includes an increase in total company operating cash flow compared to the prior guide.

We've continued our strong momentum into the second quarter with preliminary April sales up north of 13% on a daily organic constant currency basis. This start supports our expectations for the second quarter sales north of $4.9 billion or approaching 12% on a daily organic constant currency basis, which is 330 basis points lower on a reported basis when normalizing for the U.K. market exit and currency headwinds. We expect operating margins will be down sequentially in the second quarter compared to the first quarter. Beyond normal seasonality, we expect this step down will be exacerbated by headwinds from fuel costs, along with increased costs on our private label inventory, the latter of which is in line with what we had expected to hit in the first quarter.

All told, we anticipate second-quarter operating margins will be in the low 15% range for the total company. With that, I'll hand it back over to D.G. for his closing remarks.

Thanks, Dee. Overall, we feel good about how the business is operating and are confident in our strategy. I'm encouraged by our ability to continue to grow profitably in this ever-evolving environment while staying focused on creating value for the long term. Looking ahead, we will continue to focus on what matters most to our customers and earn their trust through strong execution, differentiated capabilities, and a consistent focus on doing the right thing. We recognize the significant uncertainty in the macro, but we'll stay nimble to serve customers and perform well in any environment. With that, we'll open it up for Q&A.

Thank you. At this time, we will conduct the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please while we pull for questions. Your first question comes from David Manthey with Baird. Please state your question.

First off, I appreciate that you finally moved away from the myopic quarter-to-quarter share gain discussion, particularly in a quarter where you could have taken a major victory lap. Thanks for that. We'll draw our own conclusions. My first question is on price. Could you just tell us in simple terms, just what was price contribution by each segment and overall?

Generally, we don't talk about the segment details. David, thank you for the question, though. I would say when you look at North America, we're about 5% or 5 points of price.

Okay. All right. Thank you. Then, Dee, maybe you could update us on the pacing of margins through the year. When I look back to last quarter, you said seasonally, gross margin would deviate from its normal pattern. You had LIFO price cost, and the show impacting that. You said that first-half gross margins would be at or slightly below the annual guide and then rebounding in the back half, and operating margins would follow a similar trajectory. I was just wondering if you could give us an update on your view there.

Yeah. I would say now we believe it's gonna have more of a U shape. Part of that is because, you know, Q1 performance, we did very well from a price realization perspective, as price continued to build, based upon the changes that we made in 2025, and then, of course, the change we made in January. I believe you heard in prepared remarks that we had expected to sell through more of our private label inventory in Q1, which would have created a drag. You know, not as much sold through. We're starting to see that sell-through already in Q2, so we expect that negative impact to then hit in the second quarter.

Then we also have the normal seasonality decline that happens from Q1 to Q2 because we take a larger price increase in January, and that bleeds off through the year. As you also heard us talk about the impact that we have related to fuel, we believe that is going to build. You know, that was not necessarily anticipated in the original guide, so that is, you know, new news here that we've added to the guide. The challenge that we have with the majority of our very large customers have, you know, free parcel shipping. As a result of that, it is more difficult for us to pass on accessorials and other fuel charges to them. That's gonna take us some time.

We noted that we're going to have some leakage, and then we're gonna have some timing implications. However, you know, we are confident that we will find a way to work through that, i.e., the U shape. As the year goes on, we will have a means to pass some of that price on to those customers and some of our broader customers while still remaining competitive in the marketplace.

Your next question comes from Jacob Levinson with Melius Research. Please state your question.

It might be a little too early to really see any impact here. If we look at Japan, I think that's probably a blind spot for a lot of us on this call. Is the team in MonotaRO seeing any anything to be concerned about? Because I know they've certainly borne quite a bit of the energy shock here.

You're right that certainly East Asia in particular bears more of the brunt here, given most of their energy, most of their oil and natural gas, frankly, comes through the Strait of Hormuz. What we've seen is some price pressure with some products there. You know, we have seen a little bit of buying in the end of the first quarter, they talked about on their call today of those products that are potentially at risk. It hasn't been material yet, but certainly it could become so depending on how long it goes.

Okay. That makes sense. Just on the private label side, I assume no news is good news, but I know that was a potential concern last year. Have you been able to adapt that business to just given the tariff environment? It's, it's kind of hard for us to know what all the moving pieces are there.

Yeah. Yeah. It's not a simple challenge either. What I would say is there have been some private label products where the cost spread between it and the national brand products have compressed, and we have seen some impact there and some more buying a national brand versus private brand. Some of that will probably work its way out over time, we think, we'll get back to having an appropriate gap and having very high-quality products at reasonable prices for customers in our private brand. I would also note we're having tremendous success with leveraging the Grainger brand for certain areas of our private brand as well. We're pretty excited about the path there.

Overall, we're still very confident in our private brand path, but there has been some impact for sure.

Your next question comes from Ryan Merkel with William Blair. Please state your question.

Hey, everyone. Nice job this quarter. First question is just on the demand environment. D.G., what was the surprise for you on revenue in the quarter? Was it just better end-market demand, or is the company-specific story also a part of it?

Yeah, I think it's a bit of three things. One is the end market demand we did flip. It's been negative for several years now. We think the volume growth in the market, most signals would suggest it turned to slightly positive. That's a benefit for sure. Our price realization has been higher than we had anticipated to start the year, so that's a benefit for sure. You know, our share gain's been strong as well. I think all of that has conspired to create a really strong demand environment for us.

Got it. That's great. Okay. Second question's on gross margin, I guess for Dee. You did 40%. I think you thought it would be 39%. Is all of the beat sort of this mix timing? I guess my question is: What drove the mix timing? Can you unpack, you know, why in the second quarter the cost increase in the private label is a negative? Thank you.

Sure. Let me start with the first part of that, which is, you know, why we, my words, over-made, you know, versus where we thought we would be in the first quarter. D.G. talked about some of this, but we did achieve better price realization in the first quarter than what we had anticipated, based upon some of the SKUs that customers were purchasing. You know, that was very helpful to us. The other part, or the other side of that, relates to the private label inventory. We had assumed that with some of this growth, we would be selling through much more of our lower-cost private-label inventory and have that impact in Q1. We sold through a whole lot less of that than what we anticipated.

When we now move to the second part of your question related to Q2, that negative impact, we can start seeing it come through already in our April results, will hit in the second quarter. That's the difference between those two pieces of that. In the second quarter, as you know, we have a normal seasonality with gross margin because of the price increase that we take, of course, in January, that normally subsides as we go through the year and into second quarter. We're planning for that to continue to occur as well.

I think the other thing to just clarify is while we are mostly on LIFO, our private brand inventory is on FIFO. It adds a complexity here to that, to things. That has always been the case. It's just obviously in the last year, it's all that's become more clear and necessary to talk about. That's what we're talking about on the private brand. We didn't sell through layers yet, and now we are, that are higher cost.

All right. Very helpful. I'll pass it on. Thanks.

Your next question comes from Chris Snyder with Morgan Stanley. Please state your question.

Thank you. I appreciate the question. Could you just maybe talk about the impact that the leading on the price cost, I guess primarily on the private brands? You know, how much of an impact did that have to Q1 gross margin?

About 20 basis points in the first quarter.

Thank you. I really appreciate that. If I could just maybe follow up on some of the price conversation, just to make sure I'm understanding all of that right. It sounds like you guys did the typical January start of the year price increase. It sounds like there's was another round that came in May, you said, Dee. I guess just in response to all the inflation we're seeing now, between, you know, metal, freight, tariffs, everything. I just wanna make sure I have that right. If you could provide any relative sizing for either of those two, just to help us calibrate the models. Thank you.

Hey, Chris, just to be clear. January 1, May 1, and September 1 are our normal price cycles. The May 1 wasn't in response to anything in particular. We just happened to ponder some of the things going on in that price cycle.

Yeah, that's the timing at which we can take it. I'll point you to slide 11, but I'll talk a little bit more about it. Again, as you noted, you know, January incorporated, you know, any lag we had from being able to take tariff actions from 2025, plus what we were negotiating late in the year that would impact us in 2026. That was the January price, and that was a slightly positive. Sorry, my voice, I'm losing it on this call. Slightly positive pricing action that we took because it was also net of certain Chinese tariff changes that were announced, basically rollbacks in November.

As you and D.G. were just noting, in May, which is a normal time where we can take pricing actions, we did, and that was really a net neutral price for corrections or things like that we might need to take as related to January. Also, it incorporated Section 122 actions, and it was offset by IEEPA rollback for our private label products that we directly source because we know what those standard price changes should be, and that was net neutral.

Your next question comes from Christopher Glynn with Oppenheimer. Please state your question.

W.W. Grainger (GWW) Q1 2026 Earnings Call Transcript

Company Participants