Grocery Outlet Sales Grow In Q1
Grocery Outlet reported strong gains in sales in the first quarter driven in part by growth in same-store sales and an increase in the number of transactions.
For the quarter ended March 30, net sales increased 7.4% to $1.04 billion. Comparable store sales were up 3.9% driven by a 7% increase in the number of transactions, partially offset by a 2.9% decrease in average transaction size. Adjusted net income decreased by 67.4% to $8.8 million, or $0.09 per adjusted diluted share.
As previously disclosed, the company experienced disruptions as a result of the implementation of new technology platforms in late August 2023. Such disruptions are estimated to have negatively impacted gross margin by 210 basis points in the first quarter.
"Our sales momentum remained strong during the first quarter as we continue to deliver unbeatable value with an exciting treasure hunt experience, driving continued growth in traffic and sales," said RJ Sheedy, president and CEO of Grocery Outlet. "Despite progress with our systems transition and ending the operator commission support program, as planned, we are disappointed that additional systems conversion issues resulted in a higher-than-expected adverse profit impact. Our long-term growth potential remains intact and we look forward to returning to more normalized business results as we near the end of our systems transition."
On April 1, Grocery Outlet completed the acquisition of United Grocery Outlet (UGO), an extreme value, discount grocery retailer with 40 stores located in the Southeastern United States and a distribution center in Tennessee at the time of the acquisition. This acquisition expands Grocery Outlet’s store reach into the new states of Tennessee, North Carolina, Georgia, Alabama, Kentucky, and Virginia.
Grocery Outlet has also updated its guidance for fiscal year 2024. The company is now planning to open between 58 and 62 stores, up from the previous guidance of 55 to 60 new store openings. Net sales are estimated between $4.3 billion and $4.35 billion, with comparable store growth of 3.5% to 4.5%.
