Grocery Outlet Q4 Revenue Grows
Fourth quarter revenue at Grocery Outlet was up more than 10% as a combination of sales from new stores and comparable store sales growth were cited as key drivers.
Net sales for the 13 weeks ended December 28 were $1.1 billion, up 10.9% from the comparable quarter the prior year. Comparable sales were up 2.9%.
Net income was $2.3 million, or $0.02 per diluted share compared to $14.1 million, or $0.14 per diluted share last year. Company officials said the decrease was attributable to the lower gross margin and higher SG&A as a percentage of net sales, as well as an increase in net interest expense driven by higher average principal debt outstanding during the fourth quarter of fiscal 2024.
During the quarter, Grocery Outlet opened five new stores and closed one store, ending the quarter with 533 stores in 16 states.
“We delivered solid fourth-quarter results, generating comps above expectations as customers responded to our improved value assortments,” said Eric Lindberg, chairman of the Board of Directors of Grocery Outlet. “We continue to make progress on multiple fronts, and we are keenly focused on key strategic initiatives that will strengthen our foundation and support future growth while ensuring we deliver best-in-class execution for our customers and independent operators.”
For the full fiscal year, net sales increased 10.1% to $4.37 billion, with sales at new stores and a 2.7% increase in comparable store sales cited as the key drivers.
Net income for the full year was $39.5 million, or $0.40 per diluted share compared to $79.4 million, or $0.79 per diluted share in the prior year. The decrease was attributable to lower gross margin and higher SG&A as a percentage of net sales noted above, as well as an increase in net interest expense driven by higher average principal debt outstanding during fiscal 2024.
Grocery Outlet added 67 new stores, including 40 stores from the acquisition of United Grocery Outlet, and closed two stores during the year.
During the fourth quarter, the company initiated a restructuring plan that is intended to improve long-term profitability and cash flow generation, optimize the footprint of new store growth, and lower the company’s cost base.
The Restructuring Plan includes the termination of leases for unopened stores in suboptimal locations, the cancellation of certain capital-intensive warehouse projects, and the implementation of a workforce reduction. These actions under the Restructuring Plan are expected to be substantially completed by the first half of fiscal 2025.
The company currently estimates that it will incur total costs under the Restructuring Plan of between $52 million and $61 million, of which between $36 million and $45 million are expected to be cash expenditures.
During the first quarter of 2025, the company named Jason Potter its new president and CEO. With more than 30 years of experience in the grocery industry, Potter joined Grocery Outlet from The Fresh Market where he served as CEO.
“In my first few weeks, Eric and I have been working closely together and are aligned on the company's strategic direction to drive disciplined, sustainable growth and improve returns on capital,” he said.
