Grocery Outlet 2025 Q2 Earnings Misses Targets as Net Income Plummets 64%

Grocery Outlet reported mixed results for its fiscal 2025 Q2 earnings on Aug 7, 2025. The company exceeded revenue expectations with a 4.5% increase in sales to $1.18 billion, but it missed on profitability, with a sharp 64% drop in net income. The company raised its adjusted EPS guidance for fiscal 2025 to $0.75–$0.80, reflecting improved performance and operational efficiencies.

Revenue

Grocery Outlet’s total revenue for fiscal 2025 Q2 rose to $1.18 billion, a 4.5% increase compared to $1.13 billion in the same period last year. The growth was driven by a combination of new store openings and a 1.1% rise in comparable store sales. Perishable goods accounted for $451.03 million, while non-perishable goods generated $728.74 million in net sales.

Earnings/Net Income

Earnings declined significantly, with EPS dropping 64.3% to $0.05 in fiscal 2025 Q2, compared to $0.14 in the prior-year period. Similarly, net income fell to $4.96 million, a 64.6% decrease from $14 million in fiscal 2024 Q2. This marked a record low in profitability for the quarter, underscoring the challenges the company continues to face in converting sales into profits.

Price Action

The stock price of Grocery Outlet experienced a surge, gaining 16.49% during the latest trading day, 39.80% over the most recent full trading week, and 40.23% month-to-date. Despite the disappointing earnings, the stock has shown strong short-term momentum.

Post Earnings Price Action Review

The buy-on-beat-hold strategy for Grocery Outlet delivered impressive returns post-earnings, with a 98.02% return over 30 days, outperforming the benchmark of 86.19% by a significant margin. The strategy achieved a CAGR of 14.77%, indicating strong long-term growth potential. Notably, it maintained excellent risk management with a maximum drawdown of 0.00% and a Sharpe ratio of 0.74, reinforcing its appeal for investors seeking a balance between risk and reward.

CEO Commentary

CEO Christopher R. Lischewski remained optimistic about Grocery Outlet’s trajectory in Q2 2025, noting strong customer traffic and ongoing store network expansion. He emphasized the company’s commitment to value and fresh products as key growth drivers and highlighted strategic investments in store development and digital capabilities. Despite acknowledging supply chain challenges, Lischewski outlined efforts to improve inventory management and vendor partnerships to sustain operational flexibility and scalability.

Guidance

Grocery Outlet raised its adjusted EPS guidance for fiscal 2025 to a range of $0.75–$0.80, a positive adjustment in light of improved operational efficiencies and performance. The company expects continued store-level growth and margin improvements, supported by disciplined cost management and expansion strategies. However, it did not provide specific revenue guidance for the full year, maintaining a cautious approach to inventory and labor costs while scaling operations.

Additional News

Grocery Outlet announced its Q2 fiscal 2025 financial results on August 5, 2025, revealing a 4.5% increase in net sales to $1.18 billion and a 1.1% rise in comparable store sales. The company faced a significant operating loss in the first half of the year due to restructuring charges. The restructuring plan, initiated in Q4 2024, is nearing completion and is expected to improve long-term profitability. Grocery Outlet also announced plans for continued store openings and supply chain investments, reflecting its commitment to growth and operational optimization.