Grocery Outlet misses Q3 sales estimates, lowers FY comparable store sales growth guidance

Overview

• Grocery Outlet fiscal Q3 sales rose 5.4% to $1.17 bln, missing analyst expectations

• Adjusted EPS for fiscal Q3 beat consensus, reaching $0.21

• Company's adjusted net income for fiscal Q3 exceeded estimates, totaling $20.7 mln

Outlook

• Grocery Outlet revises fiscal 2025 net sales to $4.70 bln-$4.72 bln

• Company lowers fiscal 2025 comparable store sales growth to 0.6%-0.9%

• Grocery Outlet expects fiscal 2025 adjusted EBITDA of $258 mln-$262 mln

Result Drivers

• STORE REFRESH PROGRAM - Pilot stores in the refresh program saw impressive results, leading to plans for broader rollout in Q4, per CEO Jason Potter

• NEW STORE OPENINGS - Net sales increase driven by new store sales and a 1.2% rise in comparable store sales

• GROSS MARGIN DECLINE - Gross margin decreased due to promotional activities and markdowns related to seasonal inventory

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 4 "strong buy" or "buy", 8 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the food retail & distribution peer group is "buy."

• Wall Street's median 12-month price target for Grocery Outlet Holding Corp is $18.00, about 20.9% above its November 3 closing price of $14.24

• The stock recently traded at 16 times the next 12-month earnings vs. a P/E of 16 three months ago

Press Release: ID:nGNX9lnLcm

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