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."

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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."

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

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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."

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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;

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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!"

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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.”

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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.

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F500-2020-278-WW-Grainger

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

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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

100% health coverage

Subsidized childcare

Compressed work weeks

Option to work remotely

Minimum requirement in-office attendance (days per week)

Percentage of health care premiums covered

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

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

Culture rank

Process rank

Product rank

Previous rank

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

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.

Q3 2025

Q2 2025

Q1 2025

Q4 2024

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

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W.W. Grainger

w.w. grainger

Good evening and welcome to the W.W. Grainger Third Quarter 2025 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, 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, Investor Relations. Please go ahead.

Good morning. Welcome to Grainger's third quarter 2025 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 will focus on our non-GAAP adjusted results for the third quarter of 2025, which exclude the $196 million loss recognized from the pending sale of our U.K.-based Cromwell business and the proposed closure of our Zoro U.K. business.

Definitions and full reconciliations of our non-GAAP financial measures with their 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 will 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.

Thanks, Kyle. Good morning, everyone, and thank you for joining today's call. As headlined in the release, our third quarter results were fueled by consistently strong execution from our team. Despite the continued external uncertainty, our customers remain focused on improving their operations through increased efficiency and productivity. They value the fundamentals of having inventory where and when they need it, and a partner who understands their business and can bring the right solutions. As I spent time in the market with large customers this past month, these themes rang true. I was proud to see Grainger deliver the critical fundamentals that help our customers every day. I recently had great discussions with an aerospace customer and a municipality about how Grainger's deep-rooted inventory management expertise can save them time and reduce costs.

I saw that when we deliver a great service experience, customers take notice and lead to more opportunities and deeper relationships. I also had the opportunity to speak with several experts focused on technology. Tech and AI will continue to be an ongoing focus for Grainger, enabling us to provide great solutions for customers and drive productivity in our operations. The promise of these new transformation technologies has never been greater, but the key will be leveraging our proprietary data and know-how to build solutions that connect to business processes and create a more seamless user experience. I'm excited about the work we're doing to bring more digital capabilities to both our customers and team members to make things better with every interaction. Making things better and staying focused on what matters is core to how Grainger operates, and we take that responsibility to heart in our communities as well.

Last month, at our annual bucket build in Lake Forest, more than 500 Grainger team members came out to pack over 4,000 disaster relief kits. This included filling five-gallon buckets with essential cleaning supplies and hand tools that will help families and individuals begin the process of recovery after a natural disaster. Grainger has a long-standing commitment to emergency preparedness and response efforts, and this is another reason I'm proud of how the Grainger team lives our principles every day. Now moving to our third quarter results, we delivered a solid performance that in total outpaced our August formal guide, particularly on the gross margin line. Total company reported sales for the quarter were nearly $4.7 billion, up 6.1% on a reported basis or 5.4% on a daily constant currency basis.

Gross margins for the company were 38.6%, operating margins were 15.2%, and diluted EPS finished the quarter up $0.34 to $10.21. Operating cash flow came in at $597 million, which allowed us to return a total of $399 million to Grainger shareholders through dividends and share repurchases. Our results continue to reflect tariff-related LIFO inventory valuation headwinds, consistent with what we discussed last quarter, but which came in lighter than expected in the period. As Dee will discuss, without this LIFO impact, our operating margin would have increased year over year in the period. Looking ahead, while we're continuing to see more costs in the market, these LIFO headwinds will eventually dissipate as inflation cools and our gross margin will recover to our run rate expectation.

As you likely saw, we recently announced that we've entered into an agreement to sell our U.K.-based Cromwell business and plan to fully exit the U.K. market. Given the economic dynamics post-Brexit, we had to alter our assumptions around the go-forward potential in the region. With this plan to divest, we are now focused entirely on growing our North America and Japanese businesses, where we can deliver the greatest long-term impact. Overall, while it has been an eventful few months, the business continues to perform well and in line with expectations. With this, we are narrowing our earnings outlook, which Dee will outline in a few minutes. It's important to note we factor in the October headwinds from last year's active hurricane season and an estimated impact from the government shutdown.

As we wrap up 2025, I'm confident that we'll continue to serve our customers well, deliver on our financial commitments, and drive solid results for all stakeholders. I will now turn it over to Dee to go through the details.

Thank you, D.G. Turning to slide seven, you can see the high-level third quarter results for the total company, including $4.7 billion in sales, up 5.4% on a daily constant currency basis. While gross margin finished ahead of our previously communicated expectations on a less-than-expected LIFO impact, we were still down 60 basis points year over year as segment mix headwinds and tariff-related cost impacts within the high-touch business weighed on results. This led to total company operating margins of 15.2% for the quarter, down 40 basis points compared to 2023, but 70 basis points ahead of our communicated expectations. Diluted EPS for the quarter was $10.21, $0.34 or 3.4% higher than the prior year period. Moving to segment-level results, the high-touch solution segment delivered solid growth in the quarter. In total, sales were up 3.4% on both a reported and daily constant currency basis.

Results were driven by volume growth and price inflation for the segment, with the latter improving as tariff costs continued to be passed. From an in-market perspective, our indicators suggest that the MRO market remained muted as the heightened inflationary environment continued to weigh on demand. For Grainger specifically, we saw strong performance with contractor and healthcare customers and improving results with manufacturing customers, which helped to offset slower growth in other areas of the business. For the segment, gross profit margin finished the quarter at 41.1%, down 50 basis points versus prior year, driven by similar themes to what we discussed last quarter. We saw negative but improving price cost spread as we progressed negotiations with suppliers through the quarter and passed incremental price in September.

Further, we pulled through LIFO charges to reflect the impact of supplier cost increases, albeit less than expected as certain increases were pushed into latter periods. These two tariff-related headwinds were only partially offset by mix and freight. I would note that if we excluded our LIFO headwind and wanted to compare across our peer set, which report on FIFO, our implied FIFO gross margin rate would have increased year over year. On SG&A, margin improved in the period as continued investments in our seller initiatives and marketing were more than offset by productivity and sales leverage. Taking all this together, operating margin for the segment finished at 17.2%, down 40 basis points versus the prior year quarter. Now focusing on the Endless Assortment segment. Sales increased 18.2% on a reported basis or 14.6% on a daily constant currency basis, which normalizes for the FX tailwinds realized in the period.

Zoro U.S. was up 17.8%, while MonotaRO achieved 12.6% growth in local days, local constant currency. At a business level, Zoro continues its momentum, driving efficiencies with marketing spend and working to further enhance the customer experience, including improved search, better fulfillment, and continued optimization of their assortment. Taken together, these actions are driving strong growth from its core B2B customers, along with improving customer retention rates. At MonotaRO, sales growth remains strong with continued growth from enterprise customers, coupled with solid acquisition and repeat purchase rates with small and mid-sized businesses. On profitability, operating margins increased by 100 basis points to 9.8%, with favorability across the segment. MonotaRO margins remained strong at 13.2%, up 80 basis points, and Zoro margin improved to 5.8%, up 150 basis points, with both businesses benefiting from gross margin flow-through and healthy top-line leverage.

Overall, we had another strong quarter across Endless Assortment, and we expect the team will carry this momentum forward as we wrap up the year. Before moving into guidance, I wanted to share a brief update on where we're at with tariffs. In the third quarter, we remained engaged in active dialogue with our supplier partners and used our September price increases to help offset continued cost pressure. While our initial pricing actions back in May only applied to a small portion of our products, largely those where Grainger imports the product directly, the September increase was much broader and included initial pricing actions on supplier-imported products where we had finalized negotiations. As we move into the fourth quarter, we're seeing inflationary pressure continuing to build, including impacts from the recent Section 232 expansion.

As a result, we are taking some incremental pricing actions to better align price cost timing as the tariff landscape unfolds. These actions are only modest in nature, but are in addition to the price passed earlier in the year. On profitability expectations for the fourth quarter, we anticipate gross margins will improve sequentially with our normal seasonal recovery and improving price costs. The LIFO impact is expected to be roughly consistent quarter over quarter. Looking ahead, based upon what we are hearing from suppliers as part of our annual cost cycle, we expect further inflationary pressure into 2026. With this, assuming no further material changes to the current tariff landscape, we now anticipate the inventory accounting dynamics from LIFO will persist over the next couple of quarters until inflation cools.

That being said, consistent with our long-term earnings framework, we anticipate gross margin will stabilize around 39% for the total company, subject to normal quarterly seasonality. While we will experience continued segment mix headwinds and some pressure within a subset of our private label assortment, these will be offset as price cost normalizes back to neutral and the LIFO impact subsides. On LIFO specifically, we thought it would be helpful to provide a view of how inventory accounting dynamics impact our gross margin over time, especially because of how this cycle is playing out relative to 2022. While LIFO expense is always a drag relative to implied FIFO margins, it's not typically a material impact in every period, depending on what else is impacting our gross margin results.

As you can see on slide 12, during periods of normal cost inflation, the LIFO headwind, the difference between LIFO margin and the implied FIFO margin, is roughly 20 to 30 basis points, reflecting the real-time impact of higher costs flowing through our P&L. As we enter into a heightened inflationary cycle like what we see in 2022, and like what we're seeing again today, this LIFO impact becomes more pronounced as the difference in COGS diverges between the two inventory methodologies. However, as inflation cools, the LIFO expense will normalize, LIFO and FIFO margins will converge, and as this happens and we pass further price, our reported margin will recover. With this, we expect our total company gross margins will stabilize around 39%, consistent with our long-term earnings framework.

Now, moving to the updated outlook for the remainder of 2025, as D.G mentioned at the beginning of the call, we're nearing our full year 2025 adjusted EPS outlook, which reflects slightly lower sales to account for the Cromwell divestiture, FX updates, and the impact of the government shutdown, which we're assuming reaches a resolution by mid-November. These top-line headwinds are offset by higher margins, resulting in an EPS midpoint consistent with the prior guide. In total, the updated guide includes daily organic constant currency sales growth of between 4.4% and 5.1%, and a diluted adjusted EPS range of $39.00 to $39.75. If you squeeze to the annual guide to get an implied fourth quarter, the revised revenue outlook implies a Q4 daily organic constant currency growth rate of 4% at the midpoint, which assumes more than 3 points of price contribution to revenue within the high-touch segment.

October growth is off to a slow start of approximately 1% on a preliminary daily constant currency basis as we lapped a fairly significant hurricane-related sales benefit in the first two weeks of the month and as we face current year headwinds from the government shutdown. However, if we just looked at the last two weeks of the month, which exclude the prior year hurricane impact, October total company sales are up in the 4% to 5% range on a daily constant currency basis, more in line with what we saw in the third quarter, but still reflecting the impact of the government shutdown, which is weighing on public sector sales.

Annual margin expectations have increased from our previous guide due to improved price costs and LIFO timing. If you were to squeeze the implied operating margins from the updated annual guide and focus on the fourth quarter, it shows a sequential step down in the fourth quarter to around 14.5% at the midpoint. While the puts and takes are different, this sequential movement is roughly in line with normal seasonality. Overall, despite the tariff-related noise over the last couple of quarters, we remain poised to deliver a solid year. Before I hand it back to D.G, I thought it would be important to reiterate our long-term earnings framework in light of the recent tariff uncertainty and as we look ahead. While we have made some minor edits to CapEx to reflect the latest estimates around our global DC expansion, the core tenets of our framework remain solidly intact.

We remain confident we can drive share gain in the U.S., grow the EA business in the teens, stabilize total company gross margins around 39%, and grow SG&A slower than sales through process improvements and technology. Taken together, these actions will drive attractive returns, and we remain well-positioned to deliver great results for our shareholders for the years to come.

With that, I'll turn it back to D.G for some closing remarks.

Thanks, Dee. As we head into the final months of the year, our team will continue to navigate the complex environment and deliver value for our customers, our communities, and our shareholders. As Dee mentioned, we continue to work through this inflationary environment and the challenges from the government shutdown. While there is some short-term noise, we remain confident in our ability to pass through cost increases and achieve the core tenets of our long-term earnings framework. We'll continue to stay focused on driving strong execution, providing industry-leading service, and building innovative capabilities to deliver on what matters most to our stakeholders.

Thank you. We'll now be conducting a question-and-answer session. If you'd like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the Star keys. One moment, please, while we pull for questions. Thank you. Our first question is from David Manthey with Baird.

All right. Thank you. That was a very clear presentation of the business. Thanks for outlining all of that data. Question on the 2025 guidance and the Cromwell. So Cromwell's held for sale as of September 30, so I assume you're taking any assumption out for that. Just ballpark-ish, are we talking, what, $75 million, $80 million, I'm guessing? Then from an operating income standpoint, those Cromwell operating losses are pretty immaterial. Is that all correct?

Yeah. Two things I'd point you at. We adjusted for the Cromwell impact. If you go back to the press release that we issued around our proposal to exit the U.K. in total, it incorporated both that impact as well as the impact that's being proposed for Zoro U.K.. In total, it's about $40 million.

That's $40 million in revenues for Cromwell and Zoro U.K. as held for sale in the fourth quarter.

Okay. All right. On the pricing actions that you've taken thus far in the fourth quarter of 2025, should we assume that those are in Endless Assortment? I think you said your next opportunity to adjust contract pricing on high-touch customers would be January 1. Is that another bite at the apple when we turn the page to 2026?

No. Obviously, the actions we've taken were September 1. Those have flowed into the fourth quarter, and that was a normal price cycle increase. Then on November 1, now we're taking another one, and that will flow into contracts as well as non-contract business. That's all high-touch related. Zoro has had good price inflation this year based on some strategic changes they've made.

Our next question is from Christopher Snyder with Morgan Stanley.

Sorry. I was on mute. You guys said that, I guess, ex-LIFO, the gross margin would have been up year on year, which I guess implies a LIFO headwind of something at least 70 basis points. My question is, you guys are kind of saying you'll maintain a roughly 39% gross margin through these LIFO headwinds. As the LIFO headwinds go away, does that 39% go to something closer to 40%, just assuming that we're in a 70-bps LIFO headwind backdrop? Thank you.

Thanks for the question, Chris. As we've noted during this period of time when we are comparing our results versus those who may be reporting on FIFO, we do have more of a negative impact directly related to the LIFO impact on gross margins. What we attempted to do here with our information is to recast and imply a FIFO gross margin number for Grainger for more easy comparability.

As you note, as we go through the cycle and others eat through the less expensive FIFO layers, and we're already there with LIFO, we believe gross margins will become a little bit tougher for them. As we continue to pass price, our gross margins will continue to elevate, as you noted. However, there are more things besides LIFO that impact gross margin: product mix, freight, and other areas where we're gaining some favorability. We deem that some of those things may not be as favorable in the future as price becomes more favorable. That's why we stick to that in the future. We just don't want to project out too much because all the information we have today around tariffs and other cost inflation is what we have to use to project from this point.

Thank you. I appreciate that. That was helpful. If we look at the Q4 guide, overall company up 4, so high-touch, I guess, would be below that, maybe something more like 3, which is effectively all price. It seems like the guide is calling for no volume growth within high touch. I know the backdrop's been challenged for a while, but that business has continued to grow volumes, even if modestly, through the first three quarters of the year. Is that step down in Q4 to maybe zero just all because of these government contracts and the risk associated with that, or is there also maybe macro softening alongside that? Any color there would be helpful. Thank you.

In Q4, we have two challenges, one of which you called out, which is the impact to our business related to the government shutdown. The other one is related to the benefit that we received in the prior year in October related to the hurricane. We range bound that last year at about $30 million to $40 million in the month of October. That's also a challenge that we're cycling in Q4.

The one thing I'd also point out is, if you look at October by segment, which we don't typically talk about, government is obviously impacted substantially. Everything else looks normal, effectively. It is entirely just the government impact that we're seeing from both the hurricane, which affects state governments, three states obviously in the southeast that were hit hardest last year, and then the federal government given the shutdown.

Our next question is from Jacob Levinson with Melius Research.

I realize there are some advantages on the tax front to using LIFO inventories, but I wanted to ask if there's been any discussion in terms of shifting to FIFO. It just seems like the last couple of years we've seen a lot of companies that had LIFO accounting actually moving to FIFO, just given maybe a stickier inflation backdrop.

Yeah. We obviously have talked about it, evaluated it. The thing you need to probably realize is, if you make that change, you end up having a cash payment, not an earnings payment, but a cash payment, effectively for the cumulated taxes you've saved at whatever tax rate is today. It's not an inconsequential number. We need to weigh that versus the benefit of being on FIFO and having easy compares. Right now, we're not going to make that change. We might in the future.

Okay. That makes sense. Just on the government shutdown, I realize these are unfortunately becoming more regular occurrences. In your experience, is there normally some catch-up in demand once the shutdown's over? I'd imagine a lot of these facilities are just mothballed right now. Once we ramp back up, maybe there's some pent-up demand there.

Yeah. What I would say is the nature of the shutdown, and this one in particular, obviously, some of the non-military entities that we would serve are completely shut down. Typically, you wouldn't see much of a catch-up from those. We also are seeing this impact given the lack of the number of people who are furloughed and purchasing people who are furloughed. We're seeing a little bit of a slowdown in military and other areas as well. Some of that may come back, but typically, it wouldn't all come back. You'd see a little bit of it maybe come back if there's catch-up projects that they stop doing. We would expect something between zero and something not huge to come back on that.

Okay. Perfect. Appreciate the color. Thank you.

Our next question is from Ryan Merkel with William Blair.

Hey, everyone. Thanks for the question. Just sticking with the government, did you guys size what the impact you expect in 4Q as from the government shutdown?

Yeah. I mean, basically, the way to think about that is every day, a point or more impact on our total business. If it goes six weeks, it'll be half a point. If it goes the whole time, it'll be a point or more impact. That's what we've seen so far. I would say that if it doesn't get resolved, it could become even bigger, if it goes on a long time. That's what we typically would see and expect to see now.

Okay. Got it. It sounds like you put through another price increase in 4Q, and that would be off-cycle for you, which I think I thought you were trying to stick to the national account timing there. Is that sort of a change in how you're doing things or why the off-cycle price increase?

Yeah. I think a lot of this is just probabilistic. When tariffs first hit, we actually didn't know how they would play out, and we didn't want to get out in front of it. We've been actually taking price increases when we have cost increases as opposed to speculatively. There's been over 1,000 negotiations with our suppliers at this point, lots and lots. That's not normal for the record.

What we saw was a number of cost increases come in between the time we set the 911 prices and the time we would now. What we've done is we've raised price to compensate for that, and we think it's the right thing to do. Our customers understand that.

I would just add a lot of that is price changes and corrections based upon what we're seeing in the marketplace. I wouldn't assume that that change was as big as the 5-1 change as an example.

Our next question is from Stephen Volk with Jefferies.

Great. Thank you. Apologies for beating this dead horse, D.G., but the price increase in November, was there any aspect of that that would be—I think your word was speculative—did you try to get ahead of any of this?

No. It's not speculative. It's just matching what we're seeing and what we're seeing in the market. We're sticking to our pricing tenets, which are basically price to market at this point.

Okay. Great. I think you also talked about in your private label business some headwinds, competitive kind of headwinds. How does that play out, or what can you do to sort of address that going forward?

We don't think we're uniquely exposed or at a competitive disadvantage in private brand. What has happened with some of the larger tariffs is the difference between a private brand product in some cases and a national brand product can become very tight. We have decisions to make as to how much price we take in those situations. We're still working through all of that. It's a subset of our private brand. It's not all of them. It's not a huge portion of them. For some of those cases, we have to decide how we treat those strategically.

Thanks. Our next question is from Christopher Glynn with Oppenheimer & Company.

W.W. Grainger (GWW) Q3 2025 Earnings Call Transcript

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