固安捷 (GWW) 2026 年第三季財報法說會：成長加速，調升財測

重點摘要

• 固安捷 (W.W. Grainger) 2026 年第 3 季列報銷售額成長 11.3%，按每日有機固定匯率計算則成長 14.9%。
• 調整後營業利益率年增 90 個基點至 16.1%，稀釋後調整後每股盈餘 (EPS) 成長超過 22% 至 12.54 美元。
• High-Touch Solutions 業務銷售額成長 13.8%，主要受雙位數銷量成長、價格調整以及與資料中心和發電專案相關的需求所支撐。
• Endless Assortment 業務按每日有機固定匯率計算銷售額成長 19.3%。其中 Zoro 美國按每日計算成長 25.2%，主要受既有客戶支出增加所推動。
• 管理層上調 2026 全年展望，每日有機固定匯率銷售額成長預期升至 13%-14.5%，調整後 EPS 為 $47-$48，營業利益率為 16%-16.2%。
• 運費與產品成本上升仍是主要壓力來源。運費使第 3 季毛利率減少約 20 個基點，而收購的庫存管理技術預計在未來幾個季度將使營業利益率降低 10-15 個基點。

關鍵財務數據

業務與營運表現

High-Touch Solutions 部門實現了 13.8% 的銷售額成長，反映出雙位數的銷量成長與良好的價格貢獻。所有主要終端市場均呈年增趨勢。管理層強調與資料中心和發電相關的需求，包括承包商以及分類在零售與商業服務領域客戶的支出。

該部門毛利率下滑 30 個基點至 40.8%。運費成本以及與專案相關支出帶來的微幅不利產品組合是主要壓力來源。專案收入使毛利率減少約 10 個基點。約 10 個基點的關稅退稅效益很大程度上被路易斯維爾 (Louisville) 配銷中心火災後的庫存報廢所抵銷。價格與成本效益整體保持中性。

Endless Assortment 列報銷售額成長 11.9%；在經 Zoro 英國關閉及日圓貶值影響調整後，按每日有機固定匯率計算成長 19.3%。Zoro 美國每日銷售額成長 25.2%，而 MonotaRO 按當地工作日及當地貨幣計算則成長 13.6%。

管理層指出，Zoro 的增速幾乎完全來自既有客戶採購量的增加。客戶留存率與重複購買率皆有所提升，尤其是在中小企業及大型機構的個人買家方面。MonotaRO 在企業客戶以及核心商業客戶的重複購買方面持續保持強勁動能。

該公司同時正將收購的電腦視覺與 AI 技術整合至其 High-Touch 庫存管理方案中。該系統結合攝影機、重量感應器與軟體，提供即時庫存追蹤與無感結帳服務。管理層預計該技術將有助於支援業務成長，並樹立固安捷客戶服務的差異化優勢。

管理層業績展望

在第 3 季強勁表現及持續的業務動能推動下，固安捷上調了 2026 全年展望。

初步統計 10 月銷售額按每日有機固定匯率計算成長約 18%。管理層估計，其中約 200 個基點的成長反映了與 2025 年政府停擺期間的對比效應。公司預期隨著基期拉高以及去年的價格調整效應發酵，成長速度將趨於正常化。

對於第 4 季，管理層預計銷售額將超過 49 億美元，每日有機固定匯率成長率按中位數計算將超過 14%。隱含毛利率約為 39.6%，主要受較高的供應商返利及價格成本改善所支撐，但部分被運費壓力抵銷。隱含營業利益率約為 15.5%，反映自然的季節性銷管費用 (SG&A) 負槓桿、獎勵薪酬增加以及技術整合成本。

風險與關注事項

• 柴油價格波動與運費成本上升仍是利潤率的逆風因素。運費使第 3 季毛利率減少約 20 個基點。
• 與中東衝突相關的產品成本通膨引發了 9 月的提價行動。管理層正在繼續與供應商談判，並考量在 2027 年初進一步調價。
• 持續調漲價格可能會引發客戶摩擦，儘管管理層表示在需求強勁的情況下，客戶抵觸情緒相當有限。
• 收購該技術預計將使第 4 季營業利益率降低 10-15 個基點，且隨著該解決方案規模擴大，成本壓力將持續延續至 2027 年。
• 由於基期較高以及去年同期提價效應滿一年，預計第 4 季銷售額成長將有所放緩。

分析師問答集錦

管理層表示，預計第 4 季毛利率的大部分季增改善將發生在 High-Touch Solutions 部門。較高的供應商返利以及 9 月 1 日提價行動帶來的效益，應能充分抵銷部分持續存在的運費壓力。

在獎勵薪酬方面，由於市場狀況與公司績效強於最初預期，管理層預計第 4 季將產生額外費用。薪酬水準將在 2027 年重置，管理層將其描述為相較前一年帶來的效益。

固安捷表示，9 月的提價幅度約為 1%，預計其中約 70 個基點將延續至 2027 年。未來的提價策略將取決於運費趨勢、供應商談判及產品成本。

管理層預計收購的庫存管理技術在完成整合後將達到利潤率中性，同時成為成長來源。近期的整合與規模化費用仍將對營業利益率造成微幅拖累。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Greetings, and welcome to the W.W. Grainger Third Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to introduce Kyle Bland, Vice President, Investor Relations. Thank you. You may begin.

Kyle Bland

Good morning. Welcome to Grainger's Third Quarter 2026 Earnings Call. With me are D.G. Macpherson, Chairman and CEO; and Laurie Thomson, Vice President and Interim CFO.

As a reminder, some of our comments today may include forward-looking statements that are subject to various risks and uncertainties. Additional information regarding factors that could cause actual results to differ materially is included in the company's most recent Form 8-K and other periodic reports filed with the SEC. This morning's call will focus on our non-GAAP adjusted results for the third quarter of 2026, which exclude transaction-related costs associated with the technology acquisition we completed in the period.

We have also included organic revenue adjustments in the presentation, which normalized sales growth to reflect our exit from the U.K. market, including the Cromwell divestiture and the closure of Zoro U.K., both of which were completed in the fourth quarter of 2025. Definitions and full reconciliations of our non-GAAP financial measures with their corresponding GAAP measures are found in the tables at the end of this presentation and in our earnings release. both of which are available on our IR website.

We will also share results related to MonotaRO. Please remember that MonotaRO was a public company and follows Japanese GAAP, which differs from U.S. GAAP and is reported in our results 1 month in arrears. As a result, the numbers discussed will differ from MonotaRO's public statements.

With that, I'll turn it over to D.G.

Donald Macpherson

Thanks, Kyle. Good morning, everyone, and thanks for joining today. In the third quarter, the Grainger team continued to execute at a high level with a clear focus on delivering the products and solutions our customers need. This led to strong growth and profitability in both the high-touch solutions and endless assortment segments. We continue to see an improving demand environment and deliver growth across all major end markets. We know that when we focus on what matters most to our customers, we performed well and gained share.

Our team remains focused on simplifying our customers' buying journey, and providing value inside customer operations through our expertise and suite of technology and on-site solutions. A great example of this is the technology acquisition we made this past quarter to enhance our inventory management capabilities for customers in the High-Touch Solutions segment. This new technology uses computer vision and AI to enable real-time inventory tracking and frictionless checkout to help customers reduce labor needs and operating costs. We're in the process of piloting this technology, we're also integrating it into our ecosystem.

We are encouraged by the potential it presents to help differentiate the service that Grainger provides. Beyond starting with the customer, our Grainger Edge principles emphasize doing the right thing, and we take that responsibility to heart in the communities that we serve. Last month, at our fifth Annual bucket built, team members filled 5-gallon buckets with grain to provide cleaning supplies and hand tools, completing over 4,000 kits. These kits will be distributed across the United States to help with recovery efforts after natural disasters. Bridge has a long-standing commitment to emergency preparedness and response efforts and is truly proven to [ CR team ] plays a role in helping to keep the world working.

Now turning to our third quarter results. We delivered another quarter of strong growth in profitability, underpinned by execution across both segments and [indiscernible] by continued demand strength in the underlying MRO market. Total company results for the quarter include sales growth of 14.9% on a daily organic constant currency basis, strong operating margins at 16.1% and diluted EPS over 22%. Operating cash flow came in at $661 million, allowing us to return a total of $396 million to greater shareholders through dividends and share repurchases. Overall, it was a strong quarter. With the continued momentum we are seeing across the business, we are increasing our 2026 earnings outlook and remain on track to deliver an exceptional year.

With that, I'll turn it over to our Interim CFO, Laurie Thomson, for a closer look at our financials from the quarter.

Laurie Thomson

Thanks, D.G., and good morning, everyone. Starting on Slide 7, you can see the high-level results we had in the third quarter, with total company sales up 11.3% or 14.9% on a daily organic constant currency basis. Gross margin for the quarter finished at 38.8%, up 20 basis points versus the prior year period as expansion and endless assortment was partly offset by a slight compression in the High-Touch Solutions segment.

Operating margin was 16.1%, up 90 basis points year-over-year as gross margin flow-through and leverage in both segments contributed to results. Gross margin and operating margin also benefited from our prior year exit of the U.K. market. Overall, results were strong for the quarter, and we delivered diluted EPS of $12.54 which was up over 22% versus the prior year period.

Moving to segment level results. The High-Touch Solutions segment delivered sales growth of 13.8% on both a reported and daily constant currency basis. Results were driven by double-digit volume growth and healthy price contribution to revenue. From an end market perspective, MRO demand continues to trend positively. For Grainger specifically, all major end markets were up year-over-year with strong contributions from our largest segments as well as growth in industries exposed to data centers. It shows up most notably in our retail, commercial services and contractor end markets.

On profitability, gross margin -- gross profit margin finished the quarter at 40.8%, down 30 basis points versus the prior year, largely due to continued freight headwinds alongside slightly negative mix from project-related spend. We also received a small EPA tariff refund benefit in the quarter, which was largely offset by an inventory write-off for product damage during the fire at our Louisville distribution center. Price cost was roughly neutral during the quarter. On SG&A, we gained nice leverage year-over-year as we benefited from strong sales and productivity. This more than offset continued marketing investment and higher payroll and benefits expense, including higher incentive-based compensation given our strong results. Taking all of this together, operating margin for the segment finished at 17.3%, up 10 basis points versus the prior year quarter.

Now focusing on the endless assortment segment. Sales increased 11.9% on a reported basis or 19.3% on a daily organic constant currency basis, which normalizes for the closure of our Zoro U.K. business and adjust for the impact of the depreciated Japanese yen. Zoro U.S. was up 25.2% on a daily basis, while MonotaRO achieved 13.6% growth in local days local constant currency. At a business level, Zoro saw very strong growth led by core B2B customers and improving customer retention rates. We are continuing to gain traction with customers as we remain focused on improving the assortment, digital experience pricing and delivery.

At MonotaRO, sales growth remained healthy despite some sequential pre-buying headwinds coming out of the second quarter. We continue to see momentum with enterprise customers and solid repeat purchasing from core B2B customers. On profitability, operating margins increased by 190 basis points to 11.7% with favorability across the segment. MonotaRO margins were strong at 14.3%, up 110 basis points and 0 margin improved to 8.4%, up 260 basis points if both businesses benefiting from strong gross margin flow-through and healthy top line leverage. Overall, another great quarter for the Endless Assortment team.

Before moving into guidance, I wanted to share a brief update on the inflationary environment. In the third quarter, we remained engaged with our supplier partners and used our September price increases to help offset continued inflationary pressure from rising freight and product costs due to the conflict in the Middle East. While our September pricing actions covered the majority of known cost increases at the time, we have seen continued diesel price fluctuations and we'll be taking these headwinds into consideration as we plan our pricing actions for early next year. Despite the continued freight pressure, we still expect a larger-than-normal sequential improvement and gross margins in the fourth quarter as we benefit from heightened supplier rebates due to our strong top line performance for the year.

Looking ahead, we will continue to monitor the inflationary environment and remain confident in executing on our core pricing tenants, maintaining market-relevant pricing, while achieving price cost neutrality over time.

Now moving to the updated outlook for the remainder of 2026. As D.G. mentioned at the beginning of the call, we are increasing our full year 2026 earnings outlook to reflect our third quarter strength and the continued momentum we are seeing across the business. The updated guide includes daily organic constant currency sales growth of between 13% and 14.5% for the full year and a diluted adjusted EPS range of $47 to $48. Annual margin expectations have increased slightly from our previous guide and the Q3 outperformance is partly offset by incremental cost pressures in the fourth quarter. With this, our new full year operating margin guide of 16% to 16.2% is up 100 to 120 basis points year-over-year, an increase of 10 basis points versus our prior guide at the midpoint.

The fourth quarter is off to a strong start with preliminary October sales growth of approximately 18% on a daily organic constant currency basis, aided by the lap of the 2025 government shutdown. We expect sales growth to normalize throughout the quarter as we face much more difficult compares and lap early November pricing actions from the prior year. In total, we anticipate fourth quarter sales north of $4.9 billion or up over 14% at the midpoint on a daily organic constant currency basis. If you squeeze the annual guide, you will see fourth quarter gross margins of around 39.6% at the midpoint, which reflects larger-than-normal sequential improvement as heightened supplier rebates more than offset continued freight pressure.

This sequential gross margin step-up helps partly offset normal seasonal deleverage resulting in implied operating margins in the fourth quarter of around 15.5% at the midpoint. This outlook includes incremental fourth quarter costs for continued incentive-based compensation headwinds as well as integration and operating costs as we scale the technology acquisition we completed in August. Lastly, you'll also see that we have updated our effective tax rate and cash flow projections which are included in the appendix of the earnings presentation.

With that, I'll now hand it back over to D.G. for his closing remarks.

Donald Macpherson

Thanks, Laurie. To wrap things up, the business is performing well. We're executing on our growth engines, managing through inflation and providing strong customer service in a growing demand environment. As I mentioned earlier, when we focus on things that matter most to our customers, we perform well and we gained share. I'm confident we are focused on the right things and are making the investments necessary to help our customers solve their MRO challenges and to drive continued strong returns for our shareholders. And with that, we will open it up for Q&A.

Operator

[Operator Instructions] And your first question comes from David Manthey with Baird.

分析師問答

David Manthey

I really appreciate how tight you guys keep your introductory comments. I think it's fantastic. First off, on that gross margin, thanks for the outlook there. Could you talk about the difference between High-Touch and Endless Assortment? Is it more in one or the other or pretty equally impactful across the 2?

Laurie Thomson

When you think gross margin, are you speaking about Q3 or for the guide?

David Manthey

The guidance for Q4. I'm just wondering, as we look at that sequential progression, High-Touch, depending on what year you look at, it could be 50 basis points, it could be 90 basis points, but this seems a little more on that.

Laurie Thomson

Sure. Yes. As we think about the implied guidance for Q4, you'll see that most of the impact there from Q3 to Q4, is related to some supplier rebate favorability, which we'll see in a High-Touch business. So you're right, most of it sits in High-Touch, along with the better price cost that we'll see from our 9/1 pricing actions, that also is sitting in the High-Touch area. And then also, we have -- do have some freight pressure that will get us to an implied Q4 gross margin of about 39.6% at the midpoint.

David Manthey

Okay. That's very helpful. And then as a follow-up on the High-Touch North America, given the incentive comp comments. I guess at this point of 2026, we should assume that the levels of incentive comp are sort of past the reset point. I think with the first move up in demand and when revenues accelerate, typically, there's a reset in those incentive compensation bars, it seems like we're past that. So the question is really, as we look forward and we think about how SG&A flexes with revenues, we should be more normal from here forward based on that level, having been reset already. Is that correct?

Donald Macpherson

No. We are at a point where we've had obviously a stronger market than we expected and stronger performance. And we expected in the combination has put us in an area the current -- that there's still going to be some incremental in the fourth quarter and then now what we said as the year starts. So this year, there's going to be a big negative in terms of SG&A from incentive comp, of course, that will reset next year, it's a positive for the team.

Operator

Your next question comes from Jacob Levinson with Melius Research.

Jacob Levinson

Welcome, Laurie. I echo David's comments as well. We always appreciate the shorter remarks. Just my first question, I think on Endless Assortment, it seems like that business is really starting to scale out nicely. D.G., maybe you can just speak to we just reached a tipping point in terms of the size of that business, and you've already made all these investments in infrastructure and brand awareness and whatnot. And so we should expect the operating leverage to look pretty similar from here?

Donald Macpherson

Yes. I think I would say that MonotaRO in Japan has been probably pass that point for a while and is relatively mature, continues to show nice growth. I think you're probably mostly referring to Zoro, which has done a really nice job the last couple of years of thinking hard about acquiring the right customers, getting repeat rates up and building a business that can really scale and be profitable. And yes, I think we are going to see that continue for the next several years as we continue to improve our marketing capabilities, our pricing capabilities, our delivery capabilities. So very bullish about where the business is and where it ended. And that should just continue to get better.

Jacob Levinson

Okay. That's helpful. And just on a different note, this technology acquisition that you made in the quarter, it would be helpful to just get some more context there. Is it something that you were already using or more of an opportunistic situation that came along?

Donald Macpherson

Yes. So we had already been testing the technology with the customer to -- so if you want to think about it, we're obviously winning inside customer operations, inventory management keep stocks really critical to us. And so this is basically a technology that allows us to help customers with operating costs with inventory tracking by having a system of weights and cameras and software that basically allows you to have a frictionless process where customers could just go in to a [indiscernible] area. I pick what they want and walk away, and it's all tracked.

And so the idea is that we're going to build that into our core processes over the next year or so. And it will be more of a technology acquisition, an asset acquisition that helps us grow over time. There's going to be modest integration and operating costs, probably 10 to 15 basis points over the next several quarters that go with that, but we're really excited about the ability to have a better solution for our customers to be able to differentiate our service for our customers.

Operator

Your next question comes from Christine Yao with Morgan Stanley.

Tingbing Yao

High-Touch volume was up about 10% in the quarter accelerated from Q2 level. And you pointed to maybe data center exposed end market like retail contractors were pretty strong this quarter. And I remember last quarter, you helped size projects at about 90 bps of high-touch growth. So how much was that it this quarter? And how much of the rest is contract wins and share versus the market? And I guess, is there a seasonality in those end markets into year-end?

Donald Macpherson

Yes. So products continue to be a tailwind, not quite as big as the 90 bps that we had last quarter, but still a tailwind. Yes, I think the bigger issue to probably highlight is just 2 things. One is, the market continues to improve. And certainly, a big part of that market is related to data center and power gen and our generation. And we see that show up through. When we say retail, it's typically sort of pseudo retail, retail organizations that have direct controlled data centers. And so that's where most of the project spend is coming through direct relationships there. But we're also seeing a lot of the growth show up in terms of contractors and particularly, contractors serving those data centers and power generation projects.

You see that in some of our branches that are close to those areas. We're seeing really, really steep growth. As an example, then we also see that show up in manufacturing. [indiscernible] how much of the market acceleration is data centers. But if I were guessing, I'd say it's quite a bit. given the ecosystem that it sort of has. And then in terms of our share gain, a lot of that's new contracts and contract execution and that has been very strong through the year as well.

Laurie Thomson

And just quickly to add on to answer the question about the impact on margin, the project-based revenue has about a 10 basis point drag on margin.

Tingbing Yao

Got it. That's very helpful color. And maybe as a follow-up on margin side of the things. Endless Assortment delivered strong growth and 90 bps gross margin improvement. Can you help me understand how much of that profitability improvement is structural versus like lower customer acquisition fulfillment or some other costs?

Donald Macpherson

Yes. I think all of it has to do with the business focusing on getting the right acquisitions and using the right products and marketing to get high-quality acquisitions. That's a big part of it and then some pricing actions they've taken. So it's basically acquiring the right customers, not having to discount as much to do that and then turning those customers into frequent buyers. And a bigger portion of the business is becoming really consistent buying customers now, and that actually helps that margin too.

Operator

Your next question comes from Ken Newman with KeyBanc Capital Markets.

Kenneth Newman

Laurie, I appreciate the color on the inflationary factors impacting operating margin here in the fourth quarter. Curious from a higher level perspective, is there a way to help us bridge the various buckets, whether it's incentive comp or acquisition costs or transportation costs that are in terms of the magnitude of what's driving that year-over-year decline?

Laurie Thomson

Sure. So from a -- if we take -- if we look at the operating margin from Q3 to Q4, you'll see that gross margin is going to improve sequentially, like I discussed earlier, about 80 basis points. We're going to see normal seasonal SG&A deleverage on lower sales dollars in Q4. And then we'll see some -- as we've been discussing some heightened incentive compensation impacting operating margin as well as integration and scaling costs associated with our acquisition of the technical assets that D.G. just spoke about which will get us to an implied Q4 operating margin of about 15.5% at the midpoint.

Kenneth Newman

Okay. Maybe as a follow-on to that, the -- it sounds like this acquisition is expected to be just a modest drag to the EBIT margins as it scales. Is there a way to kind of size how much of a headwind that is in the fourth quarter that's implied? And then how do we think about whether this could be accretive to margin once it's fully scaled?

Laurie Thomson

Sure. For Q4, for the implied Q4, we're looking at about 10 to 15 basis points of drag on op margin, and we expect to see that continue into 2027 as we begin to scale the solution.

Donald Macpherson

And when we're sort of integrated, it will be kind of neutral to margins and as a source of growth.

Kenneth Newman

Understood. Okay. And then maybe last one, if I could just squeeze it in. I think the leverage on transportation and logistics this quarter was a lot better than I would have expected. Is there -- maybe any color on what you're hearing with your own suppliers and how you're able to kind of offset some of these challenges. And is there a way to size what the headwind was from logistics this quarter?

Donald Macpherson

Yes. I think freight costs, obviously, diesel costs have continued to rise. Freight costs were about a 20 basis point drag. We did price in some things in September to offset that, but most of the price we took in September was actually product cost related to the conflict in the Middle East, the products that are affected. We're contemplating what to do on January 1. And obviously, the path of the world will impact that, for sure. and we'll get back to you at the end of the year and tell you what we did.

Operator

Your next question comes from Robert Davies with Wolfe Research.

Robert Davies

The first one was just -- I know on your previous quarterly call, you mentioned the impact of bed tariff refund and said there was a bit of spillover into 3Q and 4Q. I didn't notice any kind of specific numbers around that. Perhaps you could just help us out in terms of quantifying any benefit from those kind of tariff refunds in the quarter? And then the other one was just around pricing and price cost, how we should sort of think about that shaping up through 4Q and into the early part of '27?

Laurie Thomson

Sure. The tariff refund benefit we received in Q3 was about 10 basis points.

Donald Macpherson

And as Laurie said in the prepared remarks, that was largely offset by we had a fire that was very well managed, but unfortunately, that a fire nobody has heard, but it did have our sprinkler system fired up and did run some inventory we took [indiscernible].

And then in terms of price cost, our tenants at price have not changed. Our expectations are that we will be price cost neutral over time and we're pondering what to do to start the year. We're having still negotiations with suppliers. I would say we took about 1% price in September, for the full year. So we'll have probably 70 basis points of rollover. And then whatever we decide to do based on freight and the product costs, we'll add to that.

Robert Davies

Maybe just as a quick follow-up. Are you seeing any more kind of friction around customers accepting those price increases? And also, I guess, kind of tied to that, how aggressive is kind of suppliers being in terms of their price increases?

Donald Macpherson

Yes, I'd say everybody is -- suppliers are sometimes -- it's all over the map, some suppliers depending on where they're at or asking for significant price increases and we're negotiating with them. We've been pretty consistent about communicating clearly with customers in terms of the price increases, and we don't change it right away and we do it 3 times a month. And so obviously, the demand has been very strong. So there haven't been -- hasn't been that much friction, but obviously, continued price increases can create friction over time. So we're mindful of that.

Operator

Your next question comes from Connor Cerniglia with Bernstein.

Connor Cerniglia

I was hoping you could give a little more color on the 25% growth at Zoro. How much of the acceleration is coming from existing customers spending more versus customer additions? And are you seeing the strongest growth among smaller customers, larger accounts migrating online or our particular product categories?

Donald Macpherson

Yes. So the acceleration in growth is almost entirely existing customers buying more. It's almost entirely small and midsized customers or individuals at larger customers. So what we really see is sort of the core flywheel of the business doing better in terms of acquiring attractive customers, but then getting them to multiple purchases. A big portion of the business is now sort of frequent purchasers that have been around for a long time and that's a big part of the growth, too.

We flipped from existing customers not growing year-over-year and actually shrinking a little bit and having to acquire customers to really know that existing customers are stable, and we're seeing good growth there.

Connor Cerniglia

Great. Helpful. And I was hoping you can kind of switching over to the monthly sales trends you guys disclosed at the bottom of your presentation. Organic growth accelerated from about 14% in July to 15-ish [indiscernible] in August and September. Did you see anything -- any meaningful change through the quarter in terms of the underlying demand environment or customer activity and that strength generally continued as you kind of looked into October?

Donald Macpherson

Yes. So we talked about we had 18% growth in October, but 200 basis points of that was because of the government shutdown. So you probably say 16% would be kind of what I think about it. We've just seen a sort of steady strengthening throughout the year in terms of demand. And a lot of that comes from the investment in data centers we talked about before. But yes, it's been pretty steady increases, not anything [indiscernible].

Operator

Your next question comes from Tommy Moll with Stephens.

Thomas Moll

If I look at the 80 basis points of step-up sequentially, can you quantify how much of that is tied to the benefit from the rebates? And then just as we think about bridging from the fourth quarter into first quarter of next year, should we strip that quantity out just for our starting point to compare Q4 to Q1?

Donald Macpherson

Yes. I mean I think it's a significant point. It's a significant benefit. We don't typically involve the actual number, a significant benefit. I would also say, though, and yes, you want [indiscernible] for next year. We don't want to reset just like we reset incentive comp. But we also had a benefit this year from the tariff refunds and we reset that as well. We'll talk about that. But yes, I think [indiscernible]

Thomas Moll

Okay. And then, D.G., I wanted to circle back on your earlier comment regarding incentive comp. I suppose it's a good problem to have this year where you needed to accrue more than you originally expected. But as we think about 2027 compared to what you've now baked in for this year, all things equal, that should be a good guy into next year, right?

Donald Macpherson

Very much so, yes.

Thomas Moll

Okay. Any way to quantify a rough range there or too early to tell?

Donald Macpherson

We'll give you that at the end of the year. We'll be very explicit about what that is when we set the new year.

Operator

And we have reached the end of the question-and-answer session. I will now turn the call over to D.G. Macpherson for closing remarks.

Donald Macpherson

Thanks. I would just say thanks for joining us. We continue to be excited about the path ahead. I think we've seen very strong performance in growth from both the Endless Assortment and the High-Touch model. And as we said, a lot of that is a good portion of that is market, but a portion of that is our ability to execute as well. And we feel generally good about how we're setting things up for next year as well. And I just appreciate you being on the call today. Have a great rest of the week. Thank you.

Operator

This concludes today's conference, and you may disconnect your lines at this time. Thank you all for your participation.

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