Grainger Earnings Miss Estimates in Q2, Revenues Increase Y/Y

Core Insights - W.W. Grainger, Inc. (GWW) reported Q2 2025 EPS of $9.97, missing the Zacks Consensus Estimate of $10.00, but showing a 2% year-over-year improvement [1][8] - Quarterly revenues increased by 5.6% year-over-year to $4.55 billion, surpassing the Zacks Consensus Estimate of $4.52 billion, with daily sales also rising by 5.6% [1][8] Segment Performance - The High-Touch Solutions N.A. segment's daily sales grew by 2.5% year-over-year, supported by growth across all geographies, slightly above the predicted growth of 2.2% [2] - The Endless Assortment segment saw a significant daily sales increase of 19.7%, outperforming the estimated growth of 11% [2] Margin Analysis - Cost of sales rose by 6.9% year-over-year to $2.8 billion, while gross profit increased by 3.6% to $1.75 billion, resulting in a gross margin of 38.5%, down from 39.3% in the prior year [3] - Operating income rose by 4.5% year-over-year to $678 million, with an operating margin of 14.9%, slightly down from 15.1% [3] Cash Flow and Balance Sheet - Cash and cash equivalents decreased to $0.6 billion at the end of Q2 2025, down from $1 billion at the end of 2024 [4] - Cash flow from operating activities was $377 million in Q2 2025, compared to $411 million in the same quarter last year [4] - Long-term debt increased to $2.34 billion as of June 30, 2025, from $2.28 billion at the end of 2024 [5] - The company returned $336 million to shareholders through dividends and share buybacks during the reported quarter [5] 2025 Outlook - GWW updated its 2025 net sales forecast to between $17.9 billion and $18.2 billion, up from the previous estimate of $17.6 billion to $18.1 billion, with anticipated sales growth of 4.4-5.9% [6] - Daily sales growth is now expected to be between 4.5% and 6%, revised from the earlier estimate of 4% to 6.5% [6] - EPS guidance has been adjusted to $38.50-$40.25, down from the previous range of $39.00-$41.50 [6] Stock Performance - Over the past year, GWW's shares have increased by 11.2%, while the industry has seen a growth of 16.6% [7]