Grocery Outlet’s first quarter results were met with a negative market response, as investors focused on flat same-store sales and a decline in operating margin despite headline revenue and non-GAAP profit metrics surpassing Wall Street expectations. Management cited solid new store openings and improved inventory management as key drivers for the quarter, but also acknowledged ongoing challenges in driving higher basket sizes and sustaining traffic gains. CEO Jason Potter pointed to improvements in inventory visibility and execution, noting, “Our planners now have full real-time inventory visibility into the distribution centers, which enables them to drive the flow of opportunistic product through the system.”
Is now the time to buy GO? Find out in our full research report (it’s free).
Grocery Outlet (GO) Q1 CY2025 Highlights:
- Revenue: $1.13 billion vs analyst estimates of $1.12 billion (8.5% year-on-year growth, in line)
- Adjusted EPS: $0.13 vs analyst estimates of $0.07 (82.9% beat)
- Adjusted EBITDA: $51.89 million vs analyst estimates of $48.8 million (4.6% margin, 6.3% beat)
- The company reconfirmed its revenue guidance for the full year of $4.75 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $0.73 at the midpoint
- EBITDA guidance for the full year is $265 million at the midpoint, below analyst estimates of $268.3 million
- Operating Margin: -2%, down from 0.1% in the same quarter last year
- Locations: 543 at quarter end, up from 474 in the same quarter last year
- Same-Store Sales were flat year on year (3.9% in the same quarter last year)
- Market Capitalization: $1.27 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Grocery Outlet’s Q1 Earnings Call
- Anthony Bonadio (Wells Fargo) asked about strategic priorities and growth pacing; CEO Jason Potter emphasized execution, focusing on new store performance, talent, and scaling operational capabilities.
- Corey Tarlowe (Jefferies) inquired about changes to the comp store sales trajectory; Potter and CFO Chris Miller cited ongoing basket pressure and macro uncertainty but expressed confidence in long-term improvement from current initiatives.
- Robbie Ohmes (Bank of America) questioned the immediate impact of the real-time order guide; Potter reported improved fill rates but noted sales gains may lag until execution is fully embedded.
- Tom Nass (TD Cowen) requested updates on opportunistic sourcing trends; Potter stated supplier relationships remain strong and new data tools are helping operators capitalize on unique product deals.
- Leah Jordan (Goldman Sachs) asked about balancing margin improvement with market share defense; Potter said the company is seeking “optionality” to be more aggressive on pricing as efficiency gains are realized.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace and effectiveness of real-time inventory system rollouts across remaining regions, (2) early sales and margin impact from new merchandising and private label initiatives, and (3) execution of the cost efficiency program, particularly in supply chain consolidation and indirect procurement. Leadership transitions and their impact on execution will also be closely monitored.
Grocery Outlet currently trades at $12.80, down from $16.31 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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