Dee Merriwether
Senior Vice President & Chief Financial Officer at W.W. Grainger
Thanks, DG. I'd like to echo DG's sentiment -- execution on our growth strategy and improved service from a return to more normal supply chain performance helped drive excellent results in the quarter.
Starting on slide seven, you can see the high-level results, including strong sales growth of 14. 5% in daily constant currency, driven by double-digit growth locally in both segments. Although year-over-year growth rates decelerated as we moved through the quarter on tougher comps, daily sales dollars remained strong and were reasonably in line with historical sequential growth trend.
Total company operating margin was up 200 basis points as expanded gross margins in both segments dropped to the bottom line. SG&A margin was flat year-over-year as investments in headcount, marketing and technology were offset by revenue growth. In total, we delivered diluted EPS in the quarter of $9.61 up 36% versus the first quarter of 2022.
Diving into segment level details. For the first quarter, we continued to see strong results within our Hi-tech segment with daily sales of 14.5%, fueled by revenue growth in all geographies. Customer demand was generally in line with expectations for the quarter and continues to remain resilient as a whole despite certain areas of softness.
In the US, we are seeing broad-based strength across most of the manufacturing with contractors and government customers to name a few. Retail and warehousing are slowing the most, but still up high single digits. In Canada, the economy remains stable, and we are seeing good results across most end markets with Canadian daily sales up 11% and local days and local currency.
For this segment, GP margin finished the quarter at 42.4%, up 195 basis points versus the prior year. This expansion was largely driven by freight and supply chain efficiencies as well as product mix favorability.
As DG mentioned, improved product availability and short of supplier lead times drove improved stocking positions in our DCs. This availability improvement resulted in more efficient shipping routes, which helped reduce freight expense and lower our handling costs. Freight expense was further aided by a onetime adjustment, which drove 20 basis points of improvement in the period. Product mix was also a tailwind and partially due to improved product availability and partially from lapping the pandemic fuel spike in safety sales from last year's Omicron variant.
For the quarter, price cost per ad was neutral and trended largely as anticipated as price/cost favorability we captured in 2022 began to unwind and offset the structural timing benefit we typically see as we passed price early in the first quarter each year. At the operating margin line, we saw improvement of 215 basis points year-over-year. The strong gross margin in the quarter was fully aided by 20 basis points of SG&A leverage as marketing and headcount investments were more than offset by revenue growth. Overall, it was a very strong quarter for the High-Tech Solutions North American segment.
Looking at market outgrowth on slide nine, we estimate that the US MRO market grew between 7% and 8%, indicating that we achieved roughly 750 basis points of outgrowth in the quarter. As we continue to build strong partnerships and make progress with our growth engines, our customers continue to turn to Grainger to help them solve their MRO challenges.
Coupled this with our supply chain service advantage, we continue to have a high degree of confidence in delivering against our goal to consistently outgrow the US MRO market by 400 to 500 basis points in any economic cycle.
Moving to the endless assortment segment. Sales increased 3.8% or 14% on a daily constant currency basis, which adjusts for the impact of the depreciated Japanese hand. So US was up 13.5%, while MonotaRO achieved 12% growth in local stains and local currency. While Zoro generated solid growth, they are off to a slower start than anticipated predominantly due to noncore B2C business, which was down in the mid-teens year-over-year.
For small B2B customers who make up a majority of the world's business were up nicely in the first quarter but are softening a bit in April give Zoro more diversified end market customer mix outside of the industrial economy. At MonotaRO, sales were impacted by adverse weather as well as slower return to work patterns with the New Year holiday following midweek.
Sales have ramped back over the last several weeks, and we expect results to be more in line with our expectations for the balance of the year. From a profitability perspective, gross margin for this segment expanded 140 basis points versus the prior year due to strong price realization and continued freight efficiencies across both businesses as well as favorable business unit mix for the segment.
Operating margins expanded by 15 basis points year-over-year to 8.1% and primarily due to gross margin favorability offsetting investments in marketing and headcount to drive customer acquisition and assortment expansion.
On slide 11, we continue to see positive results with our key endless assortment operating metrics. Total registered users are tracking nicely with Zoro and MonotaRO combined up 16% over the prior year.
On the right, we show the continued growth of Zoro SKU portfolio, which grew by 900,000 SKUs in Q1 and stands at around $12 million in total. We are well on our way to achieving an annual goal of 2 million SKU additions in 2023.
Now looking forward to the rest of the year, given the unexpected sharp improvement in profitability and continued resilient demand environment, we are updating our total company guidance for 2023.
In our revised outlook, we are holding top line expectations with daily sales expected to be up 7% to 11% for the total company. This reflects solid Q1 performance in high touch offsetting a slightly slower start across inlets assortment with expected softness to continue for the balance of the year at Zoro.
High Touch is trending slightly higher than originally expected on a similar 1% to 5% total US MRO market outlook, which continued strong share gains. And this assortment is trending slightly lower, however, we expect daily sales for this segment to be up low double digits, which is a couple of hundred basis points higher when translated to constant currency.
Note that April sales growth for the total company is holding firm with month-to-date sales up 10% year-over-year or nearly 11% in daily constant currency. The larger changes to our guide come on the profitability side. More improved product availability and the resulting step change in service levels is driving better freight dynamics, lower handling costs and improved product mix. With this, we are raising our gross margin range to 39.1% in to 39.4%, up 70 to 100 basis points year-over-year.
While we still expect to be price/cost negative over the next few quarters as we unwind prior year favorability. The supply chain improvement is flowing through our P&L much faster than anticipated and is fueling the predominance of our revised outlook. The increase in gross margin largely falls through the op margin improvement and resulting EPS, which we now expect to be between $34.25 and $36.75 and nearly 20% increase year-over-year at the midpoint.
We have updated our supplemental guidance, which can be found in the appendix and includes revised segment margins and improved operating cash flow outlook and increased expectations for share repurchases for the year.
Our execution has put us on a great path. We are serving customers well -- we're remaining focused on the things that matter and are positioned to continue to take share. I exit the quarter very confident in our ability to continue to deliver on our commitment to shareholders.
With that, I'll turn it back to DG for some closing remarks.
