CHICAGO — Grainger reported results for the fourth quarter and full year 2025. Sales of $4.4 billion in the fourth quarter of 2025 increased 4.5%, or 4.6% on a daily, organic constant currency basis versus the fourth quarter of 2024. For the full year, sales of $17.9 billion increased 4.5%, or 4.9% on a daily, organic constant currency basis compared to the prior year.
“In 2025, we executed well, delivering exceptional service and a best-in-class experience for our customers across both our High-Touch Solutions and Endless Assortment segments,” said D.G. Macpherson, Chairman and CEO. “Despite a challenging macro environment, we drove profitable share gain, made strong progress with our strategic initiatives, and operated with resiliency. I’m very proud of the Grainger team and believe we are poised to drive strong performance moving forward.”
Revenue
For the fourth quarter of 2025, total Company sales were up 4.5%, or up 4.6% on a daily, organic constant currency basis compared to the fourth quarter of 2024.
In the High-Touch Solutions – N.A. segment, sales were up 2.2%, or 2.1% on a daily, constant currency basis versus the fourth quarter of 2024 driven by continued growth in the U.S. and Canada, including increases across most customer end markets. In the Endless Assortment segment, sales were up 14.3%, or 15.7% on a daily, organic constant currency basis versus the prior year quarter. Growth for the segment was driven by strong performance at both MonotaRO and Zoro.
For the full year 2025, total Company sales increased 4.5% versus the full year of 2024. Daily sales on an organic, constant currency basis increased 4.9% versus the prior year driven by growth in both segments.
Gross Profit Margin
For the fourth quarter of 2025, total Company gross profit margin was 39.5%, a decrease of 10 basis points compared to the fourth quarter of 2024 due primarily to segment mix headwinds.
In the High-Touch Solutions – N.A. segment, gross margin was flat compared to the prior year quarter as various factors offset. In the Endless Assortment segment, gross margin increased by 70 basis points versus the fourth quarter of 2024 due to improvement across the segment.
For the full year 2025, total Company gross profit margin was 39.1%, down 30 basis points versus the prior year. The decrease in gross profit margin was primarily driven by tariff-related inflation which caused unfavorable price / cost timing and last-in, first-out (LIFO) inventory valuation headwinds in the High-Touch Solutions – N.A. segment.
Earnings
For the fourth quarter of 2025, operating earnings for the total Company were $634 million, up 0.2% over the fourth quarter of 2024, as sales growth was largely offset by lower margin. Operating margin was 14.3%, a 70 basis point decrease compared to the prior year quarter. This decrease in operating margin was primarily due to increased expense, including unforeseen healthcare costs, and slower sales growth in the High-Touch Solutions – N.A. segment.
Diluted EPS for the fourth quarter of 2025 was $9.44, down 2.8% versus the prior year quarter. The decrease was primarily due to an unfavorable tax rate compared to the prior year quarter which was only partially offset by fewer shares outstanding.
For the full year 2025, reported operating earnings for the total Company of $2.5 billion were down 5.4% versus the prior year, as sales growth was offset by lower margin including the loss recorded in the third quarter of 2025 related to the Company’s exit from the U.K. market. Reported operating margin was 13.9%, a decrease of 150 basis points over prior year. Diluted EPS for the full year 2025 was $35.40 on a reported basis, down 8.6% versus 2024, as fewer shares outstanding were more than offset by an unfavorable tax rate compared to the prior year.
On an adjusted basis, which excludes the loss related to the Company’s exit from the U.K. market in the third quarter of 2025 and restructuring costs incurred in the second quarter of 2024, full year 2025 operating earnings were up 1.4%, or $2.7 billion, as sales growth was largely offset by lower margin. Adjusted operating margin of 15.0% decreased 50 basis points compared to 2024 due primarily to lower gross margin, higher operating expenses, and slower sales growth in the High-Touch Solutions – N.A. segment. Adjusted diluted EPS was $39.48, up 1.3% versus the prior year, as fewer shares outstanding were offset by an unfavorable tax rate compared to the prior year.
Tax Rate
For the fourth quarter of 2025, the effective tax rate was 22.8% compared to 20.1% in the fourth quarter of 2024. The variance was driven primarily by the release of a tax reserve following the expiration of a statute of limitation period that occurred in the prior year quarter.
For the full year 2025, the reported effective tax rate was 25.6% versus 23.0% in 2024, with the increase primarily due to the loss from the Company’s exit of the U.K. market, for which there was no corresponding tax benefit. On an adjusted basis, the full year effective tax rate was 23.7% versus 23.0% in 2024, with the increase driven primarily by the release of a tax reserve following the expiration of a statute of limitation period that occurred in the prior year.
Cash Flow
During the fourth quarter of 2025, the Company generated $395 million of cash flow from operating activities as net earnings were partially offset by unfavorable working capital. The Company invested $126 million in capital expenditures, resulting in free cash flow of $269 million. During the quarter, the Company returned $355 million to Grainger shareholders through dividends and share repurchases.
For the full year 2025, the Company generated $2.0 billion of cash flow from operating activities. The Company invested $684 million in capital expenditures, resulting in free cash flow of $1.3 billion in 2025. During the year, the Company returned $1.5 billion to Grainger shareholders through dividends and share repurchases.
2026 Company Guidance
The Company is providing the following outlook for 2026:
