GWWW. W. Grainger

We note your disclosure of diluted earnings per share excluding charges in the reconciliations of net earnings reported to net earnings adjusted on pages 19 and 21, the effective tax rate excluding discrete tax benefits on page 20, operating losses excluding restructuring costs and the inventory adjustment of the Canadian segment, all of which appear to represent non-GAAP financial measures.

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Please tell us your consideration of providing the disclosures required by Item 10(e) of Regulation S-K.

In the preparation of the 2017 Form 10-K, we considered the requirements of Item 10(e) of Regulation S-K and believe that our presentation of non-GAAP financial measures addressed these requirements as follows:

The Company’s use of adjusted (a) diluted earnings per share on pages 19 and 21, (b) effective tax rate on page 20, and (c) operating losses of the Canada segment on page 22, each of which is a non-GAAP financial measure, was preceded by a presentation, with equal or greater prominence, of the most directly comparable financial measure or measures calculated and presented in

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accordance with Generally Accepted Accounting Principles (“GAAP”) as required by Item 10(e)(i)(A) of Regulation S-K.

We provided tabular reconciliations between the Company’s Net earnings adjusted, a non-GAAP measure, to Net earnings reported, the most directly comparable GAAP measure, on pages 19 and 21 (the “Net Earnings Reconciliations”) in accordance with Item 10(e)(i)(B) of Regulation S-K. The Net Earnings Reconciliations presented (x) material items by category at the (1) segment and (2) unallocated level, and (y) income tax items, to aid in the understanding of the impact of these reconciling items on the financial results of the Company on a consolidated basis as well as its segments. The items constituting the Net Earnings Reconciliations were described on page 15.

The sum of the items constituting the Net Earnings Reconciliations (i.e., the amounts (in thousands of dollars) of $83,890 and $105,250 for the year ended December 31, 2017 and 2016, respectively, as set forth on page 19) had materially the same impact on the Company’s diluted earnings per share. Similarly, the Company’s effective tax rate was impacted primarily by the discrete income tax items provided in the Net Earnings Reconciliations and nondeductible intangible write-downs in other businesses described on page 15. Therefore, we believe additional reconciliations of diluted earnings per share and effective tax rate would have been repetitive of the Net Earnings Reconciliations.

In the Canada segment discussion, the items excluded to arrive at the non-GAAP measure of operating losses on page 22 were also itemized, net of tax, in the Net Earnings Reconciliations. We believe that this sufficiently identified the components between the non-GAAP measure and the directly comparable GAAP measure impacting the operating losses and the inclusion of additional reconciliations would have been, therefore, repetitive.

The Company acknowledges the Staff’s comment and in future filings will cross-reference applicable table(s) when using non-GAAP financial measures or provide additional reconciliations in accordance with Item 10(e)(i)(B) of Regulation S-K.

On pages 18 and 20, we stated that “management believes adjusted net earnings is an important indicator of operations because it excludes items that may not be indicative of core operating results” in accordance with Item 10(e)(i)(C) of Regulation S-K. In future filings, we will state why management believes each of the non-GAAP financial measures used in the Company’s Form 10-K provides useful information to investors regarding the Company’s financial condition and results of operations.

Currently, there are no other material purposes for which management uses these non-GAAP financial measures. Should this change, the Company will include in future filings the disclosure required by Item 10(e)(i)(D) of Regulation S-K.

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We note you present a Debt to EBITDA ratio, a non-GAAP financial measure. Please tell us your consideration of the guidance in Item 10(e) of Regulation S-K and the guidance in Question 102.09 in Compliance and Disclosure Interpretations of Non- GAAP Financial Measures.

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In addition, please reconcile each non-GAAP financial measure used in the calculation and show the ratio calculated using the most directly comparable GAAP measure.

The Company uses the Debt to EBITDA ratio as a measurement of liquidity and leverage. In future filings that include this ratio, we will expand the presentation of the Debt to EBITDA ratio to include the following statement: “Management believes the presentation of Debt to EBITDA ratio provides useful information regarding the Company’s liquidity and leverage.”

Item 10(e)(1)(ii)(A) of Regulation S-K expressly carves out the use of EBITDA as a liquidity measure from the general prohibition excluding certain types of charges or liabilities from non-GAAP liquidity measures.

For the Company’s

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calculation in the 2017 Form 10-K: (a) Debt was defined as total interest-bearing debt (short-term, current, and long-term), and (b) EBITDA was defined as Net Earnings before Interest, Taxes, Depreciation and Amortization.

The Company’s Debt to EBITDA ratio as of December 31, 2017, was calculated as follows (in thousands of dollars):

December 31, 2017

Balance Sheet:

Short-term debt

$

55,603

Current maturities of long term debt

38,709

Long-term debt

2,248,036

Debt

2,342,348

Consolidated Statement of Earnings:

Net earnings

622,443

Income taxes

312,881

Interest expense

80,458

Consolidated Statement of Cash Flows

Depreciation and amortization

264,064

EBITDA

1,279,846

Debt to EBITDA ratio: $2,342,348 / $1,279,846 =

1.8

In future filings, the Company will reconcile each non-GAAP financial measure used in a ratio calculation, or will clearly state if only GAAP financial measures are used in its ratio calculations.

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Please explain to us why foreign currency translation adjustments attributable to noncontrolling interest for the years ended December 31, 2017 and 2016 differ from the amounts reflected in the consolidated statements of shareholders’ equity.

In the Consolidated Statement of Comprehensive Earnings on page 40, the Company disclosed foreign currency translation adjustments (in thousands of dollars) attributable to noncontrolling interest of $3,677 and $906 for the years ended December 31, 2017 and 2016, respectively.

In the Consolidated Statements of Shareholders’ Equity, Other comprehensive (losses) earnings on page 43, the Company combined both (a) other comprehensive earnings related to foreign currency translation adjustments attributable to noncontrolling interest, and (b) capital contributions attributable to noncontrolling

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interest, in each case, for the years ended December 31, 2017 and 2016 for a combined amount (in thousands of dollars) of $3,831 and $3,664, respectively. However, the caption in the Consolidated Statements of Shareholders’ Equity referred only to the Other comprehensive (losses) earnings without reflecting capital contributions.

The table below reconciles these amounts (in thousands of dollars) as highlighted in bold, below:

For the year ended

December 31,

2017

2016

Consolidated Statements of Comprehensive Earnings; Other comprehensive earnings - Foreign currency translation adjustment attributable to noncontrolling interest (page 40)

3,677

906

Capital contribution attributable to noncontrolling interest

154

2,758

Consolidated Statements of Shareholders’ Equity; Other comprehensive (losses) earnings and capital contributions (page 43)

3,831

3,664

In future filings, the Company will present the change in noncontrolling interest to reflect foreign currency translation adjustments and capital contributions as separate line items in a manner consistent with the presentation above.

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Please include the total amounts for other comprehensive income for each year presented. Please refer to ASC 220-10-45-1Ab.

The Company will include in future filings a total for other comprehensive (losses) earnings for each year presented in the Consolidated Statements of Comprehensive Earnings as per ASC 220-10-45-1Ab. The revised format with the total amount highlighted in bold for this presentation is set forth below for illustrative purposes.

(in thousands of dollars)

Other comprehensive earnings:

Foreign currency translation adjustments

92,711

Postretirement benefit plan remeasurement, net of tax

46,543

Postretirement benefit plan reclassification, net of tax

2,043

Total other comprehensive

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earnings

141,297

Comprehensive earnings, net of tax

763,740

Less: Comprehensive earnings attributable to noncontrolling interest

36,713

Comprehensive earnings attributable to noncontrolling interest

40,390

Comprehensive earnings attributable to W.W. Grainger, Inc.

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Please disclose information about all investing and financing activities that affect assets or liabilities but that do not result in cash receipts or cash payments for each year presented. Please refer to ASC 230-10-50-3.

The Company applied the guidance provided by ASC 230-10-50-3, Noncash Investing and Financing Activities (“ASC 230-10-50-3”) when preparing the financial statements and applicable disclosures related to noncash investing and financing activities that affect recognized assets or liabilities but do not result in cash receipts or cash payments during each year presented in its 2017 Form 10-K.

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During this preparation process, noncash investing and financing activities were evaluated for proper cash flow statement presentation and any required supplemental disclosures.

For the year ended December 31, 2017, the Company entered into noncash investing and financing activity related to a capital lease of approximately $23.5 million. The Company’s Consolidated Balance Sheet at December 31, 2017 reflected the value of this capital lease as a component of Property, buildings and equipment, and corresponding liability as a component of Current maturities of long term debt and Long term debt. The 2017 capital lease was determined to be immaterial for supplemental disclosures, representing less than 1.7% of Property, buildings and equipment, net, and approximately 1.0% of Long term debt as of December 31, 2017. For 2016, there were minimal noncash transactions that in the aggregate were approximately $900,000. The Company’s capital leases are not material for each of the years presented, as stated in Note 10 on page 61.

The Company’s Consolidated Balance Sheet at December 31, 2017 and 2016 reflected the values of additions to Property, buildings and equipment, and Treasury stock recorded on an accrual basis. For the years ended December 31, 2017 and 2016, cash flows from investing and financing activities in the Consolidated Statements of Cash Flows were adjusted to reflect cash flows on a cash basis. Amounts accrued for additions to Property, buildings and equipment were $14.6 million and $13.3 million, at December 31, 2017 and 2016, respectively. Amounts accrued for purchases of Treasury stock were $12.6 million and $10.4 million, at December 31, 2017 and 2016, respectively. All were considered immaterial for supplemental disclosures, as they represented approximately 1.0% of Property, buildings and equipment, net, and less than 1.0% of Treasury stock at each balance sheet date presented.

The Company will continue to evaluate changes in its recognized assets and liabilities to determine the appropriate classification and disclosure in its Consolidated Statements of Cash Flows, and will continue to evaluate any potential noncash investing and financing activities.

In future filings, any material transactions that are identified as noncash will be disclosed as supplemental noncash activities and either summarized in a schedule accompanying the Company’s Consolidated Statements of Cash Flows or in narrative form in the Company’s Notes to its Consolidated Financial Statements.

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Please tell us your consideration of disclosing the balances of major classes of depreciable assets by nature or function at each balance sheet date. Please refer to ASC 360-10-50-1b.

The major classes of depreciable assets in Property, buildings and equipment, include (1) Buildings, structures and improvements, and (2) Furniture, fixtures, machinery and equipment.

In future filings, we will disclose the components of Property, buildings and equipment in the Notes to the Consolidated Financial Statements as follows (in thousands of dollars): Read in the reply ↗

Please provide us with a reconciliation of depreciation and amortization and additions to long-lived assets to the amounts reported in the consolidated statements of cash flows.

Long-lived assets for reportable segments reported in Note 16 on pages 72 to 74 consist of Property, buildings, equipment and capitalized software. Accordingly, asset additions and depreciation and amortization expense related to these assets were also reported in Note 16. The depreciation and amortization amount reported in the Consolidated Statements of Cash Flows (“CSCF”) included depreciation expense related to Property, buildings and equipment, amortization expense related to capitalized software and amortization expense related to other intangible assets, debt discounts and debt

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issuance costs.

The reconciliation of depreciation and amortization expense and additions to long-lived assets to the amounts reported in the CSCF is, as follows (in thousands of dollars) and as highlighted in bold, below:

For The Years Ended December 31,

2015

Depreciation and amortization (property, buildings, equipment and capitalized software)

Note 16

United States

168,862

159,334

150,654

Canada

18,965

18,050

17,334

Other businesses

31,016

23,792

19,999

Segment totals

218,843

201,176

187,987

Unallocated

21,819

21,469

18,854

Consolidated total

240,662

222,645

206,841

Amortization of other intangible assets

22,224

25,105

21,126

Amortization of debt discounts and debt issuance costs

1,178

1,107

—

Total depreciation and amortization

248,857

227,967

CSCF

Total additions to long-lived assets

187,384

153,556

302,316

7,594

12,275

20,464

61,735

95,288

21,135

256,713

261,119

343,915

5,283

10,542

16,912

261,996

271,661

360,827

Non-cash additions to long-lived assets

Capital leases

(23,453

)

(Increase) decrease in accounts payable and accrued liabilities related to long-lived assets

(1,260

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Please disclose revenues from external customers for each product and service or each group of similar products and services as required by ASC 280-10-50-40 unless it is impracticable to do so. If the information is impracticable, please disclose that fact.

Grainger is a broad-line business-to-business distributor of maintenance, repair and operating (MRO) supplies, and other related products and services. The Company’s revenue is generated primarily from sales of MRO products. Total service revenue is not material and accounts for approximately 1% of total Company revenue for the year ended December 31, 2017, as disclosed in the Company’s Form 10-K.

Grainger stocks over 1.7 million products in a wide range of categories and does not have a significant concentration of revenue from any single product or product group within its reportable

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segments. Sales information by product category and inclusive of all elements impacting the Company’s reported revenues (for example, sales incentives such as customer discounts, rebates and other) is not maintained within the financial reporting systems used to produce the Company’s consolidated financial statements. To do so would require implementation of complex processes and system enhancements across multiple enterprise resource planning instances, which the Company believes would be impracticable, costly and unduly time-consuming. Further, presentation of such data does not reflect the way the Company’s business is managed.

Finally, in conjunction with the implementation of Accounting Statements Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), as modified by subsequently issued ASUs effective January 1, 2018, we provided extended disclosure regarding disaggregation of revenue by industry for the Company’s reportable segments in Note 3 of our Form 10-Q for the quarter ended March 31, 2018. Grainger serves a large number of customers in diverse industries, which are subject to different economic and industry factors. Accordingly, the Company’s presentation of revenue by industry most reasonably depicts how the nature, amount, timing and uncertainty of Company revenue (and cash flows) are affected by economic and industry factors.

The Company acknowledges the Staff’s comment and, in future filings, it will disclose that it is impractical to provide revenue information by product category due to the way the business is managed.

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We hope the foregoing responses address the comments raised in your Comment Letter. If you have any questions concerning the above, please do not hesitate to contact me at (847) 535-0680.

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