Grainger's Q2 2026 sales rose 10.3% (13.7% underlying) and EPS rose 20.5% to $12.01, but a $43M tariff refund supplied most of the margin gain; full-year guidance was raised to $45.50–$47.25 EPS.
Revenue
$5.0B
+10.3% YoY
Net income
$570M
+18.3% YoY
Diluted EPS
$12.01
+20.5% YoY
Operating margin
16.1%
How GWW compares with Industrials peers
Figure
GWW
Peer median
Rank
Revenue growth (YoY)
+10.3%
+8.5%
34th of 79
Operating margin
16.1%
17.9%
44th of 78
EPS growth (YoY)
+20.5%
+13.4%
30th of 77
Rank 1 = fastest revenue growth, highest operating margin, fastest EPS growth. Peers are the other Industrials companies with a 2026 report on this site, each at its latest period we've analyzed; fiscal calendars differ, so periods are not always the same months.
W. W. Grainger's second quarter (April–June 2026) sales rose 10.3% to $5.02 billion and diluted earnings per share (EPS) rose 20.5% to $12.01. Both of Grainger's businesses grew: the core North American sales-rep-and-branch business (High-Touch Solutions N.A.) was up 11.9%, and the online "Endless Assortment" business (MonotaRO in Japan and Zoro in the US) was up 13.5%. Part of the profit jump is a one-time item, though. Grainger booked a $43 million refund of IEEPA tariffs it had paid on goods it imported directly. The IEEPA tariffs are the emergency tariffs imposed under the International Emergency Economic Powers Act, and the refund reduced cost of goods sold. The company counts the refund in its "adjusted" results too, so the headline figures include it. Management raised its full-year 2026 guidance on the back of the quarter.
At a glance
+13.7% daily, organic, constant-currency sales growth. This strips out the UK businesses Grainger exited in late 2025 and the effect of a weaker yen. It is faster underlying demand than the 10.3% reported figure shows.
16.1% operating margin, up from 14.9%. Operating margin is the share of revenue left after running the business, before interest and tax. Without the $43 million tariff refund it would have been about 15.2%, so roughly three-quarters of the 1.2-point improvement came from the refund.
$444 million operating cash flow against $600 million net earnings. The quarter turned only about 74% of its profit into cash, because customers owed Grainger much more money at quarter-end than they did at year-end.
The numbers
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$5,021M
$4,554M
+10.3%
Daily, organic constant-currency sales growth
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Segment operating margins are calculated from the segment operating earnings in the 10-Q ($686M and $589M for High-Touch; $121M and $92M for Endless Assortment). Grainger says its Q2 2026 and Q2 2025 results are the same on a reported and an adjusted basis.
Where the growth came from
High-Touch Solutions N.A. ($3.97 billion, +11.9%). This is the business that sells maintenance, repair and operating supplies (such as safety gear, motors and fasteners) to factories, government agencies, hospitals and contractors through sales reps and branches. The 10-Q says the increase was "primarily due to volume". The earnings release adds a second driver, "price inflation as tariff costs are passed" to customers. In other words, some of the sales growth comes from higher prices that reflect tariffs rather than from more units sold. On a daily, constant-currency basis the segment grew 11.7%. Grainger adjusts for selling days because a quarter with an extra business day flatters sales; this quarter had 64 selling days in both years.
Endless Assortment ($1.05 billion, +13.5% reported, +20.6% underlying). This segment sells a very large online catalogue at lower prices and lower margins. The underlying growth rate is much higher than the reported one for two reasons. First, the yen weakened, which cut reported growth by about 6 percentage points. Second, the prior-year figure included Zoro U.K., which Grainger closed in late 2025. The 10-Q credits the growth to "repeat business for the segment and enterprise customer growth at MonotaRO" (larger corporate accounts in Japan). Operating earnings rose 32% to $121 million. The segment's gross margin rose 90 basis points (0.9 percentage point) to 30.7%, "primarily due to favorable discount activity at Zoro and favorable product mix". SG&A (selling, general and administrative costs, meaning overhead) grew only 10%, mostly because of higher marketing spend, so each extra dollar of sales carried more profit.
The UK exit. Grainger sold Cromwell and closed Zoro U.K. in Q4 2025. In Q2 2025 those "Other" businesses brought in $81 million of sales and lost $3 million at the operating line. Without them, reported sales grow more slowly but margins look better. The release lists a "benefit related to the Company's exit from the U.K. market" among the reasons gross margin and operating margin improved.
What the headline numbers hide
The tariff refund does much of the margin work. The $43 million IEEPA refund reduced cost of goods sold, and Grainger does not remove it from its adjusted figures. Without it, operating earnings would have been about $764 million, a 15.2% margin compared with 14.9% a year ago. That is still growth of about 13% rather than 19%. The release attributes the refund to the High-Touch segment ("benefit from the IEEPA tariff refunds and positive mix were partly offset by unfavorable freight and headwinds from certain private label products"). If all $43 million sits in that segment, High-Touch's gross margin was about 40.8% excluding the refund, against 41.0% a year ago. Its operating margin would have been about 16.2% against 16.6%, because payroll and benefits pushed SG&A up 12.6%, faster than sales. That is our calculation, not a figure the company reports, but it matches the CEO's description of "core operating profitability" as "in line with expectations" rather than improving.
What drove EPS growth. Net earnings rose 18.3%. EPS rose 20.5% because buybacks cut the diluted share count from 48.1 million to 47.2 million (about 2%). The tax rate worked against Grainger: it rose from 23.2% to 24.8% on "decreased tax credit activity" and 2026 tax legislation. At last year's rate, EPS would have been roughly $0.27 higher. Using the 24.8% tax rate, we estimate the tariff refund added about $0.68 to EPS. Without it, EPS would have been about $11.33, up roughly 14% rather than 20.5%.
Cash conversion was weak this quarter but normal year to date. Q2 operating cash flow was $444 million against $600 million of net earnings. Free cash flow (operating cash flow minus $111 million of capital spending) was $333 million, slightly less than the $341 million Grainger paid out in dividends and buybacks in the quarter. For the first half, operating cash flow of $1,183 million matched net earnings of $1,181 million. The item to watch is accounts receivable (money customers owe Grainger). It rose from $2,329 million at year-end to $2,825 million, up 21% in six months, while first-half sales grew 10%. Trade payables rose $317 million over the same period, which softened the cash impact. The filing does not say whether any tariff refund is still waiting to be collected within that balance.
Guidance went up, but by a modest amount. Management's comparison of its May and August guidance is below. First-half diluted EPS was $23.66. The new full-year range of $45.50–$47.25 therefore implies second-half EPS of $21.84–$23.59, which is at or below the first half's result. The first half included the tariff refund, so a flat-to-lower second half is consistent with that refund not repeating.
Guidance
2026 guidance (adjusted)
Previous (May 7)
Updated (Aug 4)
Net sales
$19.2–$19.6B
$19.4–$19.7B
Daily, organic constant-currency growth
9.5%–12.0%
11.5%–13.0%
Gross margin
39.2%–39.5%
39.3%–39.6%
Operating margin
15.6%–16.0%
15.8%–16.2%
Diluted EPS
$44.25–$46.25
$45.50–$47.25
Operating cash flow
$2.2–$2.4B
$2.25–$2.4B
Share buyback
$0.95–$1.05B
$0.975–$1.05B
High-Touch Solutions N.A. operating margin
17.0%–17.4%
17.2%–17.6%
Endless Assortment operating margin
10.2%–10.6%
10.4%–10.8%
The effective tax rate guidance stays at about 25%.
Takeaway: Grainger's demand is strong: underlying sales grew 13.7%, partly because tariff costs are being passed through in prices. Much of the quarter's margin gain, however, came from a $43 million tariff refund that will not recur. Without the refund, the core High-Touch business probably lost a little margin as payroll costs outpaced sales. The Endless Assortment segment is the one where profitability is clearly improving.
What to watch next
High-Touch margin without refunds. Full-year guidance of 17.2%–17.6% is above the segment's reported 17.3% in Q2, which included the refund. Q3 will show whether the segment reaches that range through volume leverage and pricing without the refund. The filing names freight costs and private-label products as ongoing drags.
Price versus volume. Some of the sales growth reflects tariff costs passed on to customers. If tariff policy changes again, reported sales growth could slow even if customers keep buying the same amount.
Receivables. The next 10-Q will show whether the rise in customer balances reverses. If it does not, the full-year operating cash flow target of $2.25–$2.4 billion requires a strong second half.
Endless Assortment margin. The segment reached 11.5% in Q2, above its full-year guidance of 10.4%–10.8%. That suggests either a softer second half or conservative guidance.
The full 10-Q and the earnings release (Exhibit 99.1 to the 8-K filed August 4, 2026) were both used for this analysis; figures are from the 10-Q unless attributed to the release.