Grocery Outlet (GO) Q1 2025 earnings summary

Executive summary

• Net sales rose 8.5% year-over-year to $1.13 billion, driven by new store openings and a 0.3% increase in comparable store sales, with transaction growth offset by lower average ticket size.

• Gross margin improved by 110 basis points to 30.4% due to better inventory management and ERP system upgrades.

• Adjusted EBITDA grew 31.7% to $51.9 million, or 4.6% of net sales, exceeding outlook ranges.

• Operating loss of $22.5 million included $33.9 million in restructuring charges; adjusted net income increased 47.7% to $13.0 million.

• Leadership transitions announced, with retirements of COO and Chief Store Officer, and new CIO and CFO in place.

Financial highlights

• Gross profit increased 12.7% to $342.4 million; gross margin up to 30.4%.

• SG&A expenses rose 9.1% to $331.1 million, mainly due to added personnel from acquired stores.

• Net loss widened to $23.3 million, or $(0.24) per diluted share, compared to a $1.0 million loss last year.

• Adjusted net income was $13.0 million ($0.13 per share), up from $8.8 million ($0.09 per share) last year.

• Net cash from operations was $58.9 million, up from $7.8 million; capex was $65.3 million.

Outlook and guidance

• Fiscal 2025 net sales guidance maintained at $4.7–$4.8 billion; gross margin expected at 30.0%–30.5%.

• Comparable store sales growth guidance in the range of 1%-3% for the year, with sequential improvement expected.

• Restructuring charges expected at $59–$61 million; net interest expense guidance reduced to $32 million.

• Q2 guidance: comp-store sales ~1%, gross margin 30%-30.5%, adjusted EBITDA $62-$65 million, EPS $0.16-$0.18.

• Net new store openings projected at 33–35; capital expenditures (net of tenant improvement allowances) forecast at $210 million.