GO · Grocery Outlet Holding Corp.

Grocery Outlet Holding Corp. announced first quarter fiscal 2026 results showing net sales growth of 3.6% to $1.17 billion, fueled by new store openings, though partially offset by a 1.0% decline in comparable store sales due to a 3.1% drop in average transaction size despite a 2.1% rise in transactions. Gross margin contracted 80 basis points to 29.6%, pressured by 50 basis points from inventory markdowns and write-offs linked to the Optimization Plan store closures, plus product promotions, though mitigated by better inventory management. SG&A expenses rose 4.8% to $347.0 million or 29.8% of sales, driven by higher professional fees, commissions, and growth-related costs, offset somewhat by lower incentive compensation. The reported operating loss of $178.0 million stemmed primarily from a $158.0 million non-cash goodwill impairment triggered by declining market capitalization and $18.2 million in restructuring charges related to the Optimization Plan, which does not affect future operations. Adjusted metrics paint a more operational picture, with adjusted EBITDA at $43.1 million (down from $51.9 million last year) and adjusted diluted EPS at $0.05. CEO Jason Potter highlighted sequential comp-store sales improvements and progress in boosting opportunistic product mix to drive customer resonance and sustainable growth. The Optimization Plan entails closing 36 underperforming stores (27 closed in Q1, remaining 9 in Q2), lease exits, and operator agreement terminations, with estimated $20-27 million in net restructuring charges through fiscal 2027. The company reaffirmed fiscal 2026 guidance, including net sales of $4.60-4.72 billion, comp sales flat to down 2.0%, gross margin 29.7-30.0%, and adjusted EBITDA $220-235 million, signaling confidence amid restructuring efforts.