Grainger Posts 3.1% Sales Growth in 2Q, Lowers Outlook

MRO and other industrial supplies distributor Grainger reported its 2024 second quarter financial results on Aug. 1, showing a continued deceleration in year-over-year sales growth and a lowered full-year outlook.

Chicago-based Grainger posted 2Q total sales of $4.312 billion, up 3.1% year-over-year, with daily, organic sales up 5.1%.

Here’s how the overall and daily, organic sales figures have looked since the start of 2023:

It is important to note the context that most of 2023’s sales figures had the tailwind benefits of inflationary impacts, especially in 1Q and 2Q.

Grainger’s 2Q24 gross margin was 39.3%, which was flat compared to the second quarter of 2023 and flat from 1Q24. The company’s 2Q24 operating profit of $649 million was down 1.8% year-over-year, with an operating margin of 15.1%, down 70 basis points year-over-year.

Grainger had a 2Q24 net profit of $490 million — flat compared to a year earlier.

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“I’m proud of our team for providing a flawless experience and creating tangible value for our customers. Amidst the backdrop of a slow, but generally stable demand environment, we focused on what matters and produced another quarter of solid results,” Grainger Chairman and CEO D.G Macpherson said in the company’s earnings report. “As we look to the second half of the year, I’m confident in our ability to execute well and deliver results for all stakeholders.”

Grainger frequently appeared on MDM’s 2024 Top Distributors Lists, led by its No. 1 ranking in Industrial Supplies, MRO and Safety.

Business Unit Performance

Performance within Grainger’s two business units in 2Q24:

• High-Touch Solutions: 2Q daily sales were up 3.1% year-over-year, with growth driven by increased volume in all geographies and broad-based gains across most customer and end markets. Gross margin was flat compared to 2Q23 at 41.7%, which was attributed to various factors.
• Endless Assortment: 1Q daily sales were up 3.3% year over year, or 1.7% on a daily basis. Grainger said revenue growth in the segment was driven by core B2B customers at Zoro and strong performance across MonotaRO, notably with enterprise customers, partially offset by a continued decrease in non-core customers.

2024 Outlook

In updating its 2024 full-year outlook, Grainger narrowed its sales guidance range from the $17.2-$17.7 billion that it issued in its 1Q24 report down to $17.0-17.3 billion in 2Q report. The company now expects daily, organic sales growth of 4.0%-6.0%, down from 4.3%-7.3% in the previous outlook.

Grainger forecasts full-year 2024 gross margin of 39.2%-39.4% and operating margin of 15.3%-15.7% — both flat compared to the previous outlook.