Grocery Outlet 2025 Q1 Earnings Misses Targets as Net Income Plummets 2174.8%

Grocery Outlet (GO) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company missed expectations, with significant losses compared to last year. While revenue showed an increase, net income drastically fell, marking a record low. Guidance remains unchanged as the company anticipates improvements in operational execution. Despite the loss, CEO Jason Potter expressed confidence in the long-term potential of Grocery Outlet, focusing on their unique business model and strategic goals.

Revenue
The total revenue of Grocery Outlet increased by 8.5% to $1.13 billion in 2025 Q1, up from $1.04 billion in 2024 Q1.

Earnings/Net Income
Grocery Outlet's losses deepened to $0.24 per share in 2025 Q1 from a loss of $0.01 per share in 2024 Q1, reflecting a significant deterioration in earnings.

Price Action
The stock price of Grocery Outlet has dropped 6.89% during the latest trading day, has tumbled 8.70% during the most recent full trading week, and has jumped 11.90% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Grocery Outlet shares following a quarter-over-quarter revenue decline and holding for 30 days has delivered poor outcomes over the last five years. This approach yielded a return of -7.40%, significantly underperforming the benchmark return of 84.08%. The strategy exhibited an excess return of -91.48% and a negative CAGR of -1.53%, indicative of substantial losses. Additionally, it experienced a high maximum drawdown of -25.32% and a low Sharpe ratio of -0.11, pointing to considerable risk and negative returns.

CEO Commentary
Jason Potter, President and CEO of Grocery Outlet, expressed satisfaction with the first quarter results, noting that comparable store sales and gross margins exceeded expectations, driven by traffic growth and enhanced inventory management. He highlighted confidence in Grocery Outlet's long-term potential, emphasizing the company's unique business model that provides value through opportunistic products. Potter underscored the importance of their offering during economic uncertainty and reaffirmed the vision of becoming a beloved brand while focusing on significant shareholder value creation through robust top-line growth and improved profitability.

Guidance
The company anticipates continued improvement in operational execution, which should lead to further acceleration in performance. Jason Potter conveyed optimism about the long-term potential of Grocery Outlet, emphasizing that the foundational work underway is aimed at achieving their vision of strong top-line growth and enhanced profitability. The strategic focus on execution and market positioning is expected to drive sustained value for shareholders moving forward.

Additional News
Grocery Outlet announced key executive transitions, with Ramesh Chikkala, EVP, Chief Operations Officer, planning to retire in June, and Pamela Burke, EVP, Chief Stores Officer, retiring later this year. CEO Jason Potter praised their contributions, highlighting Chikkala's role in stabilizing leadership teams and Burke's decade-long relationship-building with independent operators. The company is actively seeking new leadership for store operations and other key management positions. Additionally, Grocery Outlet initiated a restructuring plan aimed at optimizing new store growth and reducing costs, which includes terminating leases for suboptimal locations and canceling certain warehouse projects. These actions are expected to be largely completed by the first half of fiscal 2025.