Earnings

Grocery Outlet Restores Comparable Sales After Two-Quarter Slide

The Tip Desk · November 12, 2026 · 3 min read

Comparable store sales rose 0.5% in the third quarter as Grocery Outlet lifted its fiscal 2026 comp outlook to a 0.2% to 0.4% increase.

Grocery Outlet Holding Corp. (GO) returned to positive comparable store sales in the third quarter of fiscal 2026, reversing a two-quarter slide that had begun with a 1.0% decline in the first quarter.

The extreme-value retailer reported comparable store sales up 0.5% in the 13 weeks ended October 3, 2026, after a 0.3% decline in the second quarter. President and CEO Jason Potter said the turn was driven by continued improvements to the execution of the company’s opportunistic product offering, with traffic accelerating and basket trends improving sequentially.

Net sales increased 0.9% to $1.18 billion, a slower year-over-year pace than the 1.1% increase in the second quarter. The company said the sales gain reflected new-store openings and the comparable-store recovery, partially offset by lower sales from store closures under its Optimization Plan. Transactions rose 2.4%, while average transaction size fell 1.9%, a milder basket decline than the 2.1% drop in the prior quarter. Grocery Outlet opened 14 new stores and closed none, ending the period with 561 stores in 16 states.

Gross margin was 30.0%, down 40 basis points from a year earlier, matching the prior quarter’s 40-basis-point year-over-year compression. The company attributed the decline primarily to product promotions, higher transportation expenses and a broad reduction in consumer demand for produce tied to a Cyclospora outbreak associated with certain fresh produce items, partly offset by a favorable shift in sales mix toward opportunistic products. Gross profit was $353.0 million.

Selling, general and administrative expenses were $332.5 million, or 28.2% of net sales, down 30 basis points from 28.5% in the second quarter. Operating income was $24.0 million and included $3.6 million of net restructuring credits related to the Optimization Plan, consisting of $15.8 million of non-cash credits, primarily from the net write-off of lease right-of-use assets and lease liabilities, partly offset by $12.2 million of cash charges.

Net income was $13.3 million, or $0.13 a share, compared with $11.6 million, or $0.12 a share, a year earlier. Adjusted net income was $15.6 million, or $0.16 a share, down from $20.3 million, or $0.20 a share, in the second quarter. Adjusted EBITDA was $59.4 million, or 5.0% of net sales, down from $65.7 million, or 5.5% of net sales, in the second quarter.

Cash from operations was $18.2 million. Capital expenditures before tenant improvement allowances were $28.1 million; net of those allowances, spending was $25.7 million.

Under the Optimization Plan, initiated in the first quarter of fiscal 2026, Grocery Outlet closed 36 underperforming stores in March and April 2026 and has substantially completed termination of operator agreements for those locations and certain other stores. The company raised its estimate of total net restructuring charges under the plan to $22 million to $29 million, citing an update in expected lease-termination and idle-property costs, and now expects the operational actions and financial impacts to be substantially completed by the fourth quarter of fiscal 2027.

For full-year fiscal 2026, Grocery Outlet revised comparable store sales guidance to an increase of 0.2% to 0.4%, from a prior range of a 0.5% decrease to 0.0%. Net sales guidance of $4.70 billion to $4.72 billion and gross margin of 29.8% to 30.0% were unchanged. Adjusted EBITDA guidance was cut to $225 million to $229 million from $225 million to $235 million. Net new store openings were trimmed to 30 to 31 from 30 to 33. Diluted adjusted earnings guidance was $0.52 to $0.55 a share, with the low end raised from $0.51. Capital expenditures net of tenant improvement allowances remain $170 million.

More on GO

September 28, 2026 QBook Stronger demand supports expansion as pricing diverges

GO — all coverage and financials