Dive Brief:
- Grocery Outlet’s net sales increased just shy of 1% year over year during its third quarter, to $1.18 billion, the discounter announced Tuesday. The company’s comparable-store sales grew by half a percentage point in Q3, ending three consecutive quarters of negative comps.
- The Q3 performance reflects customers responding favorably to the discount grocer’s value messaging efforts, Jason Potter, the company’s president and CEO, said during its earnings call.
- Grocery Outlet also saw a lower-than-expected sales headwind from the cyclospora outbreak and recorded strong traffic and basket sizes during the quarter, CFO Ian Ferry told investors. “Our efforts to restore and enhance the attributes that make this business unique and differentiated are starting to resonate with consumers and drive sales improvement,” he said.
Dive Insight:
As Grocery Outlet has worked to turn around its financial performance, the discount grocer has had success transitioning “from broad-based synthetic promotions to now surgically deploying investments,” Potter told investors.
In an example of that, the discounter’s 80th anniversary celebration in August included targeted marketing that highlighted its opportunistic deals, with the three-day event generating double-digit comps and strong units-per-transaction growth, he said.
Grocery Outlet’s main priority in 2026 has been to boost its selection of goods through opportunistic sourcing — with the goal of improving consumers’ price perception of the discounter.
Overall, the company’s combination of value messaging and assortment changes is helping drive traffic growth, Potter said.
“We’ve activated the entire organization in this effort, starting with our buying and merchandising teams, and partnering with our suppliers and collaborating with our independent operators,” Potter said. “We’ve made some important trade-offs. One example is to reduce elements of our everyday assortment to ensure we make the space for opportunistic products in our supply chain.”
Along with this more “compelling assortment,” Grocery Outlet also kept its everyday assortment pricing competitive during Q3, Potter said. The company has also installed new signage, updated its digital outreach, rolled out a “more shoppable website” and placed more focus on messaging its deals and discovery elements, he added.
“As inflation continues to pressure household budgets and more shoppers cite value as their top purchase criteria, we're working to ensure our offering is increasingly relevant,” Potter said.
Grocery Outlet opened 14 stores in Q3 and expects to end its fiscal year with about 30 total new stores.
The discounter revised its full-year guidance and now expects higher comp sales growth than originally anticipated. The company expects the metric to fall between 0.2% and 0.4%, up from its previous projection of -0.5% to 0%.
“We’re confident in our ability to build off the results of the work we’ve done this year and drive towards sustainable, profitable growth,” Ferry said. “Near term, we remain focused on getting more opportunistic product into our stores across more departments, ensuring our value proposition is well communicated to customers, and managing the business with discipline.”
