W W Grainger (GWW) 47th Annual Raymond James Institutional Investor Conference summary

Business overview and strategy

• Operates two go-to-market models: High-Touch for large, complex customers and Endless Assortment for small/mid-sized businesses, each tailored to customer needs.

• High-Touch accounts for 80% of revenue, focusing on deep product knowledge and value-added solutions; Endless Assortment represents 20%, targeting online buyers with a vast SKU selection.

• Significant investments in data, technology, AI, and machine learning drive efficiency, product breadth, and customer experience across both models.

• Supply chain is optimized for business customers, leveraging automation and demand sensing to ensure high fulfillment accuracy and speed.

• Purpose-driven culture, codified as the Grainger Edge, underpins operations and has earned industry recognition for leadership and workplace quality.

Financial performance and outlook

• Achieved strong growth in both segments, with High-Touch outpacing the MRO market by 500 basis points over the last decade.

• Endless Assortment segment has more than doubled revenue in five years, nearing $4 billion annually.

• 2026 guidance: revenue of $18.7–$19.1 billion, organic sales growth of 6.5–9%, and EPS of $42.25–$44.75, up 10% at midpoint.

• Margin improvement expected from exiting the UK market in late 2025 and recovery in High-Touch gross margins.

• Operating margin expansion of 40–90 basis points projected, with a focus on SG&A leverage and maintaining gross margins around 39%.

Market positioning and competitive advantages

• Holds only 7% share in the large, fragmented High-Touch market, indicating significant growth runway.

• AI and ML initiatives enhance product assortment, marketing ROI, and seller productivity, supporting sustainable growth.

• Supply chain scale and reliability are key differentiators, enabling efficient delivery and customer satisfaction.

• Value-added services include tailored product recommendations, safety audits, and sustainability solutions, resulting in low return rates.

• Strategic rationale for Endless Assortment is to profitably reach all customer sizes and drive incremental margins over time.