W.W. Grainger Inc. reported net sales of $4.74 billion, an increase of 10.1% year over year for its Q1 ended March 31.
The industrial distributor raised its full-year outlook after a quarter that CEO D.G. Macpherson said was “meaningfully outpacing” the company’s expectations.
“Despite the ongoing tariff uncertainty and the broader geopolitical climate, we are encouraged by the positive signals we are seeing in the demand environment,” Macpherson said in a May 7 call with investors.
Grainger ecommerce results in Q1
Grainger’s Endless Assortment segment, the umbrella for online businesses Zoro U.S. and MonotaRO in Japan, grew revenue by 19.6% compared to its fiscal Q1 2025.
Zoro U.S. revenue grew 18.7% year over year in Q1. The jump was driven by strength in its core B2B customers and improving customer retention, Grainger said.
“The team continued to deliver on core foundational capabilities, improving the customer experience across pricing, fulfillment and website functionality,” Deidra Merriwether, chief financial officer at Grainger, told investors of Zoro’s successful quarter.
Over the same period, MonotaRO grew revenue 24.3%. That was driven by enterprise customer expansion and solid repeat purchase rates among small and mid-sized businesses. The Japanese segment of the business also benefited from a cyber outage suffered by a competitor, Merriwether said.
How Grainger is using AI
Macpherson told investors that Grainger is using artificial intelligence (AI) across the business. Its goals are both to drive internal productivity and to improve customer experience.
In the first category, he listed AI support for customer service agents, applications in finance, and use in supply chain to increase efficiency. Macpherson did not provide more specific examples.
In the second category, he noted that Grainger is using AI to improve search and merchandising capabilities for customers. He said those benefits would be critical for long-term success.
“It [AI] is pervasive and will be even more so. Pointing at the right things to create advantage, in addition to driving productivity, is really important,” Macpherson told investors.
Grainger outlook for the rest of 2026
Grainger projects revenue between $19.2 and $19.6 billion for the full 2026 fiscal year. The update represents an increase from previous guidance of $18.7billion to $19.1 billion. That’s due to strong sales in Q1, along with good execution and growing market demand, Macpherson said.
The growth is slightly offset by higher fuel costs, which will slow margin growth, he said.
“We recognize significant uncertainty in the macro, but we will stay nimble to serve customers and perform well in any environment,” Macpherson added.
Merriwether cited tariffs and war in the Middle East among the topics being considered in Grainger’s outlook.
“Moving forward, the team is busy evaluating further inflationary pressures from recently announced tariff changes and the knock-on effects from the conflict in the Middle East,” she stated.
Merriwether noted that the company anticipated “modest impact on the business” following the U.S. Supreme Court’s February ruling against tariffs that had been issued using the International Emergency Economic Powers Act (IEEPA). Still, she highlighted concerns related to fuel and shipping during Grainger’s earnings call.
Fuel and supply chain concerns
“On fuel, we are working with our supplier and transportation partners to minimize cost headwinds that have risen as diesel prices remain pressured,” she said. “We ultimately strive to pass these costs through to customers, but there is some leakage since a number of our customers don’t fully pay for parcel shipping.”
Specifically, she said Grainger was “starting to see supply pressure from the conflict in the Middle East.” The supply pressure, she stated, was “related to certain raw material inputs on some categories like nitrile-based gloves.”
“As of now, this is minimal on the U.S. business, but we’re starting to see more strain in the Japanese market given the region’s reliance on energy inputs, which move through the Strait of Hormuz,” she added.
Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s update on Grainger sales.
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