Grocery Outlet Q1 Sales Up, Net Loss Grows
First-quarter net sales at Grocery Outlet were up more than 8%, but the company reported a larger net loss compared to the same quarter the previous year.
For the quarter ending March 29, total sales were $1.13 billion, up 8.5% over the first quarter of the previous fiscal year. The gains were driven by new store sales, including those acquired in the United Grocery Outlet deal. Comparable store sales were up 0.3%, impacted by the timing shift of the Easter holiday.
Net loss in the quarter was $23.3 million, or ($0.24) per diluted share, compared to a net loss of $1.0 million, or ($0.01) per diluted share, last year.
Transactions increased 2.3% during the period, while average transaction size decreased 2%. Grocery Outlet opened 11 new stores and closed one, ending the quarter with 543 stores in 16 states.
“We delivered solid first-quarter results, with comp-store sales and gross margins slightly ahead of our outlook, driven by traffic growth and tighter inventory management,” said Jason Potter, president and CEO of Grocery Outlet. “We are encouraged by the improvement in our margins and the progress we have made on our real-time order guide.”
The company is continuing with its restructuring plans that began in the fourth quarter of fiscal year 2024. The plan includes the termination of 28 leases for unopened stores, the cancellation of certain capital-intensive warehouse projects, and a reduction in headcount to build a more scalable cost structure.
As of March 29, the company estimates it will incur total costs under the restructuring plan of between $59 million and $61 million, of which between $40 million and $42 million are expected to be cash expenditures. The plan is expected to be completed by the first half of fiscal 2025.
Additionally, the company announced that Ramesh Chikkala, executive vice president and chief operations officer, will retire this June, and Pamela Burke, executive vice president and chief stores officer, will retire later this year.
“Pam has led a number of functions and forged strong relationships with our IOs during her decade with the company,” said Potter. “Ramesh has helped stabilize and build leadership teams to drive systems improvements, while also strengthening our supply chain.”
The company is commencing a search for a new store operations leader, along with other key management roles.
