Sherwin-Williams (SHW 0.03%), a leading paint and coatings manufacturer with a large store network across the Americas, released its second-quarter 2025 results on July 22, 2025. The headline news: while the company barely outpaced revenue forecasts for the period, earnings missed analyst expectations by 11%, and guidance for the remainder of FY2025 was reduced due to softer demand. Revenue was $6.31 billion, just ahead of the $6,295.5 million GAAP estimate, representing only 0.7% GAAP net sales growth over the prior year. Diluted non-GAAP earnings per share were $3.38, 8.6% below the same period last year and 11% below analysts' consensus of $3.80. Overall, the quarter was marked by sluggish demand, rising costs, and increased spending on restructuring, all of which weighed on profitability and led to a more cautious outlook for the rest of the year.
About Sherwin-Williams: Business Model and Focus Areas
Sherwin-Williams operates one of the largest networks of company-owned specialty paint stores in North America, complemented by product lines that include architectural paints, industrial coatings, and specialty resins. The Paint Stores Group focuses on serving professional painters, contractors, and do-it-yourself homeowners, while other segments reach DIY customers and industrial buyers. Its global presence and scale give it a competitive edge in customer access and product distribution.
In recent years, the company has doubled down on several strategic areas: expanding its distribution footprint, investing in product innovation, controlling raw material and logistics costs, developing its workforce, and maintaining compliance with environmental regulations. Key to its business model are strong supplier relationships, in-house product development, and a disciplined approach to talent recruitment and retention. The expansion of the Paint Stores Group network and continued R&D investment remain important growth drivers for the company.
Quarter in Detail: Revenue, Segment Performance, and Key Moves
Sales in the period reached $6.31 billion, just above expectations and essentially flat from the previous year. The slim growth came as the company’s largest segment, Paint Stores Group, continued to outperform by gaining share in both protective and marine paints—a category for high-durability coatings—and residential repaint, which targets renovation and maintenance of existing homes. Protective and marine sales grew by a high-single-digit percentage, while residential repaint sales increased by a mid-single-digit percentage. This segment reported GAAP revenue of $3.70 billion, a 2.3% increase. Price increases contributed mid-single-digit percentage growth within Paint Stores Group sales, but overall same-store sales rose only 0.8%, down from 2.4% the year before, reflecting a slowdown in underlying demand.
The Consumer Brands Group, which provides products primarily to do-it-yourself (DIY) customers and large retailers, saw GAAP revenue decline 4.1%, amid continued softness in DIY demand in North America and negative effects from currency translation in Latin America. Performance Coatings Group—which supplies industrial customers with packaging coatings, coil coatings (for applications like metal roofs or appliances), and specialized finishes—was essentially flat, with strong gains in packaging offset by lower sales elsewhere. Notably, reported operating profit margins compressed in both Consumer Brands and Performance Coatings, dropping by 3.9 and 3.1 percentage points, respectively, as lower volume and rising supply chain costs hit both divisions.
The company’s gross margin, or the profit left after accounting for the cost of goods sold, improved for the 12th consecutive quarter, reaching 49.4% (GAAP). This margin expansion was supported by higher selling prices and some gains in supply chain efficiency, particularly in the Paint Stores Group. However, these gains were outstripped by higher selling, general, and administrative (SG&A) expenses, which rose to 31.9% of sales from 29.4% a year earlier. The company cited increased investments in growth, new store openings, and restructuring costs, including $59 million in restructuring expenses and about $40 million in building project costs. Non-operating costs also weighed on profits by about $75 million.
One of the more positive notes is the company's ongoing investment in its store network. During the quarter, 20 net new Paint Stores Group locations were added, bringing the total to 4,811, while the Consumer Brands Group closed 28 stores. Management highlighted that expansion in high-opportunity markets and record-low store labor turnover are helping it maintain operational consistency. Additionally, the company maintained its focus on talent development programs and continued environmental compliance efforts, though environmental expenses were immaterial for the period at $0.4 million.
Dividend payments continued, with $197.9 million returned to shareholders through dividends. Dividend payments for the quarter increased by 10.8% compared to the same period in 2024. In addition to dividends, the company also repurchased shares, bringing the total capital return to $716 million.
Outlook and What to Watch
Looking ahead, management lowered full-year guidance for FY2025 due to softening demand in key markets, including continued weakness in the North American DIY segment and reduced project volumes from commercial and new residential construction. Consolidated net sales (GAAP) for FY2025 are now projected to be up or down a low-single-digit percentage, rather than increasing slightly as previously guided. Diluted GAAP earnings per share for the year are expected to be between $10.11 and $10.41, a decline of approximately 2.7% from last year. Adjusted diluted earnings per share guidance is now $11.20 to $11.50 for full year 2025, a minimal change from the prior full-year actual figure of $11.33.
For the upcoming third quarter, the outlook remains guarded, with sales again projected to be up or down a low single-digit percentage. No significant catalysts for improvement are visible at this time, and management signaled that headwinds from currency movements, supply chain inefficiencies, and restructuring efforts could continue to impact results. The company did not announce a further change to its dividend policy during the period.
Note: Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
