Dive Brief:
- Grocery Outlet saw its net sales increase 5.4% year over year, to $1.17 billion, and its comparable-store sales grow just over 1% during its third quarter.
- While both metrics were slightly better than its Q2 results, Jason Potter, the company’s president and CEO, told investors Tuesday that the discounter has several initiatives underway that it believes will soon fuel financial growth.
- During Q3, Grocery Outlet started remodeling stores under a new format that will roll out to additional stores. The company also welcomed two leaders to its C-suite and rolled out tools to better help its independent operators manage inventory and forecast demand.
Dive Insight:
Grocery Outlet is finding its footing as it moves forward with four key priorities that Potter outlined during the company’s Q1 call in May, just a few months after he took over the top posts.
At the end of Q3, Grocery Outlet “experimented with promotional activity as well as marketing mix that was, we believe, net-negative,” Potter said. That unsuccessful test with its marketing mix and promotional timing was part of the reason Grocery Outlet’s comparable sales growth was lower than expected, CFO Christopher Miller said on the call.
Grocery Outlet’s same-store sales growth has fluctuated
“While we’re dissatisfied with our current comp performance, we’re making significant, sustainable progress against our strategy, setting the company up to deliver stronger comp performance in ‘26 and beyond,” Potter said on the call.
The store refresh initiative, which involves relocating produce to the front of the store, is a key part of Grocery Outlet’s efforts going forward, executives said. The company plans to dial up expansion of the store refresh program next quarter.
For its independent operators, or IOs, the company has started rolling out new product ordering guides that will give the store owners “greater visibility into inventory and the capability to sharpen merchandising,” Potter said.
Grocery Outlet has also made progress in hiring top talent, Potter said, noting that the company recently welcomed Frank Kerr, a former Lidl US executive, as chief store operations officer, and Scott Fremont, a Target veteran, as chief supply chain officer.
Grocery Outlet revised parts of its fiscal 2025 guidance. The grocer narrowed its net sales range forecast from $4.7 billion to $4.8 billion to a new estimate of $4.7 billion to $4.72 billion. The company also lowered its comp-store sales range estimate to 0.6% to 0.9%.
For the full year, Grocery Outlet now expects to open 37 new stores, up from its previous target of at least 33. During Q3, Grocery Outlet opened 13 stores and closed two, ending the quarter with 563 stores across 16 states.
As grocers wait to see how the suspension of federal funding for SNAP will impact their sales, Miller noted that “any potential disruption to sales resulting from delayed or missed SNAP benefits” is not factored into the company’s guidance. EBT payments, “a substantial portion of which may be related to SNAP benefits,” accounted for roughly 9% of Grocery Outlet’s sales last year, Miller said on the call.
