Shares of industrial supply company W.W. Grainger plummeted around 7% in pre-market trading on Friday after the company reported mixed fourth quarter 2024 results and issued disappointing guidance for 2025 due to a muted demand environment.

For the fourth quarter of 2024, W.W. Grainger reported earnings per share of $9.71, narrowly missing analysts' estimates of $9.75. However, revenue of $4.23 billion was in line with expectations, up 5.9% year-over-year.

The bigger disappointment came from the company's 2025 guidance. W.W. Grainger forecasted earnings per share in the range of $39 to $41.50, lower than analysts' consensus estimate of $42.14. The company also projected full-year revenue between $17.6 billion and $18.1 billion, missing Wall Street's expectations of $18.2 billion.

W.W. Grainger attributed the weaker-than-expected guidance to a "muted demand environment" across its markets. In a statement, Chairman and CEO D.G. Macpherson said, "Amidst a stable, yet muted demand environment throughout 2024, our team delivered strong performance by staying focused on what matters and delivering an outstanding customer experience."

The company's guidance implies a slowdown in growth for 2025, with revenue expected to increase by just 2.7% to 5.2% compared to 4.2% in 2024. The projected earnings growth range of 0.7% to 7.2% also suggests a deceleration from the previous year's 6.8% increase.

Investors reacted negatively to the muted demand outlook and the potential impact on W.W. Grainger's financial performance, leading to the sharp decline in the stock price during pre-market trading.