Grocery Outlet’s second quarter results received a positive market response, with management crediting operational changes and early benefits from its new store strategies for the performance. CEO Jason Potter highlighted improvements in inventory management, better merchandising, and disciplined cost control as key drivers, along with steady progress in piloting new store formats and technology upgrades. The company also attributed its results to a modest increase in same-store sales, improved gross margin through shrink reduction, and initial momentum from supply chain simplification. Potter noted, “We achieved our objectives for Q2…driving improvements in inventory management and merchandising.”
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Grocery Outlet (GO) Q2 CY2025 Highlights:
- Revenue: $1.18 billion vs analyst estimates of $1.19 billion (4.5% year-on-year growth, 0.6% miss)
- Adjusted EPS: $0.23 vs analyst estimates of $0.17 (32.9% beat)
- Adjusted EBITDA: $67.75 million vs analyst estimates of $64.29 million (5.7% margin, 5.4% beat)
- The company reconfirmed its revenue guidance for the full year of $4.75 billion at the midpoint
- Management raised its full-year Adjusted EPS guidance to $0.78 at the midpoint, a 6.9% increase
- EBITDA guidance for the full year is $265 million at the midpoint, above analyst estimates of $262.7 million
- Operating Margin: 1.1%, down from 2.3% in the same quarter last year
- Locations: 552 at quarter end, up from 524 in the same quarter last year
- Same-Store Sales rose 1.1% year on year (2.9% in the same quarter last year)
- Market Capitalization: $1.81 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 From Grocery Outlet’s Q2 Earnings Call
- Anthony Bonadio (Wells Fargo) questioned the underlying drivers for comp acceleration in the back half; CEO Jason Potter detailed improvements from sharper KVIs pricing, enhanced in-stock rates, and new arrival guides as contributors.
- Corey Tarlowe (Jefferies) asked about the drivers behind new store cohort outperformance; Potter cited site clustering, refined selection criteria, and pilot-driven execution as keys to early success.
- Mark Carden (UBS) inquired about recent consumer behavior and SNAP (Supplemental Nutrition Assistance Program) impacts; Potter responded that customer patterns remain steady and Grocery Outlet stands to benefit from value-seeking SNAP recipients.
- Jeremy Hamblin (Craig-Hallum) sought clarity on future infill market share and IO feedback; Potter explained the shift towards more infill openings and highlighted IO enthusiasm for new operational tools as central to execution.
- Oliver Chen (TD Cowen) probed private label strategy and opportunistic supply; Potter discussed ongoing private label expansion, its positive margin impact, and continued strong buying opportunities for opportunistic products.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the success of new arrival guide and forecasting tool rollouts in driving comp growth and improved in-stock rates, (2) sustained outperformance of new store cohorts and the evolving mix of infill versus new market openings, and (3) the realization of cost savings and SG&A leverage as systems optimizations are completed. Pilots in fresh and private label categories will also be important indicators of broader execution.
Grocery Outlet currently trades at $18.14, up from $13.01 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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