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November 4, 2025 • 4 min read
W.W. Grainger, Inc. (GWW), a major B2B supplier of maintenance, repair, and operating (MRO) products, recently released its financial results for the third quarter of 2025. For anyone wanting to understand the operational health of industrial and commercial sectors, Grainger's performance is often a bellwether. We're diving into the company's latest 10-Q filing to break down the numbers and see what they tell us about the company's recent performance.
The headline figures present a mixed picture: while Grainger continues to grow its sales, its profitability took a substantial hit this quarter. Let's look closer at the moving parts.
For the third quarter ended September 30, 2025, Grainger reported net sales of $4.66 billion, a respectable 6.1% increase from the $4.39 billion it posted in the same period last year. This top-line growth indicates sustained demand for its products.
However, the story changes as we move down the income statement. Operating earnings fell a sharp 25.5% to $511 million, and net earnings attributable to the company plummeted nearly 40% to $294 million. This resulted in diluted earnings per share (EPS) of $6.12, a significant drop from $9.87 in Q3 2024.
To see how Grainger's revenue turned into profit this quarter, the following flow diagram provides a visual breakdown.
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In the diagram above, the "Unallocated" streams represent revenues and costs from smaller business activities that don't fit into Grainger's two main reportable segments. Crucially, for this quarter, the unallocated expenses also contain a major one-time charge, which we'll discuss next.
So, what caused such a steep decline in profit despite rising sales? The primary culprit was a surge in Selling, General, and Administrative (SG&A) expenses, which jumped 24.5% year-over-year.
A closer look at the financial notes reveals that this increase wasn't due to runaway operational spending. Instead, the company recorded a $196 million impairment charge related to assets held for sale and business divestitures. An impairment charge is a non-cash expense that companies take when the value of an asset on their books is deemed to be overstated.
Excluding this significant one-time event, the company's financial health appears much more stable. Grainger's own non-GAAP reconciliation shows that adjusted operating earnings would have been $707 million, a 3.1% increase over the prior year. This adjusted figure provides a clearer view of the core business's ongoing performance.
Grainger's results also highlight the differing performance of its two primary business segments:
High-Touch Solutions N.A.: This is Grainger's core North American business, providing a hands-on, service-intensive model. It saw modest sales growth of 3.4%, reaching $3.64 billion. Operating earnings were essentially flat at $624 million, showing stability in its largest market.
Endless Assortment: This segment is the company's growth engine, comprised of online-first platforms like Zoro and Japan's MonotaRO. It delivered impressive sales growth of 18.2% to $935 million. Operating earnings for this segment also grew by 17.1% to $82 million, underscoring the success of its digital strategy.
W.W. Grainger's third-quarter results tell a story of solid, ongoing growth, particularly from its digital channels. While the headline profit numbers were jarring, they were heavily skewed by a significant, non-recurring impairment charge. The underlying business remains resilient, showing modest adjusted profit growth.
The key challenge for Grainger will be to continue managing costs and driving efficiency in its mature High-Touch segment while investing to sustain the powerful growth of its Endless Assortment business. With this large charge now in the past, investors and market watchers will be focused on seeing if the company can translate its consistent sales growth into stronger, cleaner profit margins in the quarters to come.
Last updated: November 4, 2025