Grocery Outlet Holding Corp. Announces Second Quarter Fiscal 2026 Financial Results
Rhea-AI Summary
Grocery Outlet (NASDAQ: GO) reported second quarter fiscal 2026 net sales of $1.19 billion, up 1.1% year over year, with comparable store sales down 0.3%. Gross margin was 30.2% versus 30.6% a year ago. Operating income was $15.8 million, including $5.4 million of net restructuring charges, and net income was $5.6 million or $0.06 per diluted share. Adjusted net income was $20.3 million ($0.20 per diluted adjusted share) and adjusted EBITDA was $65.7 million, 5.5% of net sales.
For the 26 weeks ended July 4, 2026, net sales rose 2.3% to $2.36 billion, while comparable store sales fell 0.6%. The company recorded a $158.0 million non-cash goodwill impairment, contributing to a year-to-date net loss of $174.7 million. Under its Optimization Plan it closed 36 underperforming stores and now expects fiscal 2026 net sales of $4.70–$4.72 billion, improved comparable sales guidance of -0.5% to 0.0%, adjusted EBITDA of $225–$235 million, and diluted adjusted EPS of $0.51–$0.55.
Positive
- Q2 2026 net sales up 1.1% to $1.19 billion
- Q2 2026 GAAP EPS increased to $0.06 from $0.05
- Q2 adjusted EBITDA $65.7 million, 5.5% of net sales
- Fiscal 2026 net sales guidance raised to $4.70–$4.72 billion
- Fiscal 2026 diluted adjusted EPS guidance increased to $0.51–$0.55
- Q2 capital expenditures net reduced to $38.7 million from $58.3 million
Negative
- Q2 comparable store sales declined 0.3%; 26-week comps down 0.6%
- Gross margin down 40 bps in Q2 and 60 bps year-to-date
- Goodwill impairment $158.0 million driving 26-week operating loss of $162.2 million
- 26-week net loss widened to $174.7 million, or $(1.77) per share
- Q2 operating cash flow fell to $43.2 million from $73.6 million
- Store closures 40 year-to-date, including 36 under the Optimization Plan
News Explained
For the quarter ended
Market reaction after 2Q26 earnings report: GO +13.57%
Following this news, GO has gained 13.57%, reflecting a significant positive market reaction. Our momentum scanner has triggered 8 alerts so far, indicating moderate trading interest and price volatility. The stock is currently trading at $11.55. Trading volume is above average at 1.7x the average, suggesting increased trading activity.
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Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| May 13 | First-quarter earnings | Negative | -0.9% | Large goodwill impairment and restructuring charges accompanied a quarterly net loss. |
| Mar 04 | Fourth-quarter earnings | Negative | -27.9% | Impairments and the Optimization Plan accompanied reduced fiscal-year expectations. |
| Nov 04 | Third-quarter earnings | Positive | -8.1% | Sales and adjusted EBITDA increased despite restructuring costs and reduced guidance. |
| Aug 05 | Second-quarter earnings | Positive | +42.7% | Sales growth and higher adjusted EPS guidance accompanied lower net income. |
| May 06 | First-quarter earnings | Negative | -6.1% | A net loss and lowered comparable-store outlook accompanied restructuring actions. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Earnings reactions aligned with the reported direction in four of five tag-specific events, while the historical average move was -0.05%.
Key Terms
comparable store sales financial
adjusted ebitda financial
goodwill impairment financial
non-gaap financial measures financial
restructuring charges financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
EMERYVILLE, Calif., Aug. 12, 2026 (GLOBE NEWSWIRE) -- Grocery Outlet Holding Corp. (NASDAQ: GO) ("Grocery Outlet," the "Company," "we" or "our") today announced financial results for the second quarter of fiscal 2026 ended July 4, 2026.
Highlights for Second Quarter Fiscal 2026 as compared to the Prior Year Period:
- Net sales increased by
1.1% to$1.19 billion . - Comparable store sales declined by
0.3% . - Gross margin was
30.2% compared to30.6% last year. - Operating income was
$15.8 million , which included$5.4 million in net restructuring charges. - Net income was
$5.6 million , or$0.06 per diluted share, compared to$5.0 million , or$0.05 per diluted share last year. Adjusted net income(1) was$20.3 million , or$0.20 diluted adjusted earnings per share(1), compared to$22.8 million , or$0.23 diluted adjusted earnings per share(1) last year. - Adjusted EBITDA(1) was
$65.7 million , representing5.5% of net sales.
Highlights for the 26 Weeks Ended July 4, 2026 as compared to the Prior Year Period:
- Net sales increased by
2.3% to$2.36 billion . - Comparable store sales declined by
0.6% . - Gross margin was
29.9% compared to30.5% last year. - Operating loss was
$162.2 million , which included$158.0 million in non-cash goodwill impairment and$23.6 million in net restructuring charges. - Net loss was
$174.7 million , or$(1.77) per diluted share, compared to net loss of$18.4 million , or$(0.19) per diluted share last year. Adjusted net income(1) was$24.9 million , or$0.25 diluted adjusted earnings per share(1), compared to$35.8 million , or$0.36 diluted adjusted earnings per share(1) last year. - Adjusted EBITDA(1) was
$108.8 million , representing4.6% of net sales.
“We delivered second-quarter results ahead of our outlook, as efforts to strengthen our opportunistic offering and value perception gained traction,” said Jason Potter, President and CEO of Grocery Outlet. “Comparable-store sales trends improved over the first quarter, driven by sequential improvement in our basket with traffic remaining positive. This progress reinforces our confidence that restoring the core strengths of our business and better supporting our independent operators can build a stronger foundation for sustainable, profitable long-term growth.”
__________________________________
(1) Adjusted net income, diluted adjusted earnings per share, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures, which exclude the impact of certain special items. Please note that our non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the "Non-GAAP Financial Information" section of this release as well as the respective reconciliations of our non-GAAP financial measures below for additional information about these items.
Second Quarter Fiscal 2026 Financial Summary
Net sales increased
Gross profit was relatively unchanged at
Selling, general and administrative expenses increased slightly to
Operating income was
26 Weeks Ended July 4, 2026 Financial Summary
Net sales increased
Gross profit increased slightly versus last year to
Selling, general and administrative expenses increased by
Operating loss was
Cash Flow & Capital Spending:
- Net cash provided by operating activities during the second quarter of fiscal 2026 was
$43.2 million compared with$73.6 million for the second quarter last year. The decrease in operating cash flow was driven primarily by lower accrued and other liabilities due primarily to timing, lower operating lease liabilities as a result of the Optimization Plan, and a lower net income in the current quarter, after adjusting for non-cash charges. - Capital expenditures for the second quarter of fiscal 2026, before tenant improvement allowances, were
$43.7 million , a decrease of$21.5 million from the second quarter of fiscal 2025 due to fewer new store openings and prior year investments in new warehouses. Capital expenditures, net of tenant improvement allowances, for the second quarter this year, were$38.7 million compared with$58.3 million for the same period last year.
Optimization Plan:
We initiated a business optimization plan during the first quarter of fiscal 2026, intended to strengthen long-term profitability and cash flow generation, improve operational execution, optimize our existing store footprint and align with our disciplined new store growth strategy (the "Optimization Plan"). The Optimization Plan provides for the closure of 36 financially underperforming stores ("Closure Stores"), including the termination, sublease or assignment of the applicable store leases, the termination, sublease or assignment of a lease for a distribution center facility that we are no longer utilizing (together with the store leases, the "Lease Exits"), and the termination of operator agreements with independent operators ("IOs") for the Closure Stores as well as certain other store locations (the "Operator Agreement Terminations").
During the first half of fiscal 2026, we closed all 36 Closure Stores. We also substantially completed the Operator Agreement Terminations, and we increased the provision for IO notes and IO receivables reserves. In addition, we negotiated lease terminations with the landlords for certain of the Lease Exits and wrote-off the right-of-use assets and lease liabilities associated with these leases. For all other leases associated with the Lease Exits, we incurred costs to prepare the premises for surrender to the landlords and idle property costs, net of proceeds received.
In connection with the Optimization Plan, we estimate we will incur between
Outlook:
The Company has revised key guidance figures for fiscal 2026 as shown in the current guidance as follows:
| Previous | Current | |
| New store openings, net(1) | 30-33 | 30 to 33 |
| Net sales | ||
| Comparable store sales increase / decrease | - | - |
| Gross margin | ||
| Adjusted EBITDA | ||
| Diluted adjusted earnings per share | ||
| Capital expenditures (net of tenant improvement allowances) |
__________________________________
(1) Excludes store closures related to the Optimization Plan.
Conference Call Information:
A conference call to discuss the second quarter fiscal 2026 financial results is scheduled for today, August 12, 2026 at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-9208 approximately 15 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at https://investors.groceryoutlet.com.
A taped replay of the conference call will be available within three hours of the conclusion of the call and can be accessed both online and by dialing (844) 512-2921 and entering access code 13760801. The telephone dial-in replay will be available for approximately two weeks after the call. The webcast replay will be available for approximately one year after the call.
Non-GAAP Financial Information:
In addition to reporting financial results in accordance with accounting principles generally accepted in the United States ("GAAP"), management and the Board of Directors use EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, and cash-on-cash return as supplemental key metrics to assess our financial performance, and net leverage as a supplemental metric to assess our liquidity. These non-GAAP financial measures are also frequently used by analysts, investors and other interested parties to evaluate the Company and other companies in our industry. Management believes it is useful to investors and analysts to evaluate these non-GAAP financial measures on the same basis as management uses to evaluate our operating results and liquidity. Management uses these non-GAAP financial performance measures to supplement GAAP financial measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. In addition, we use adjusted EBITDA and adjusted earnings per share to supplement GAAP financial measures of performance to evaluate performance in connection with compensation decisions. Management believes that excluding items from operating income (loss), net income (loss) and earnings (net loss) per diluted share that may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude, enhances the comparability of our results and provides additional information for analyzing trends in our business. Management uses net leverage to evaluate our overall liquidity and financial flexibility to pursue operational strategies and to evaluate our capital structure, and our ability to service our long-term debt obligations.
Management defines EBITDA as net income (loss) before net interest expense, income taxes and depreciation and amortization expenses. Adjusted EBITDA represents EBITDA adjusted to exclude share-based compensation expense, asset impairment and gain or loss on disposition, acquisition and integration costs, restructuring and related charges and certain other expenses that may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales, expressed as a percentage. Adjusted net income represents net income (loss) adjusted for the previously mentioned adjusted EBITDA adjustments, further adjusted for the amortization of property and equipment purchase accounting asset step-ups and deferred financing costs, tax adjustment to normalize the effective tax rate, and tax effect of total adjustments. Basic adjusted earnings per share is calculated using adjusted net income, as defined above, and basic weighted-average shares outstanding. Diluted adjusted earnings per share is calculated using adjusted net income, as defined above, and diluted weighted-average shares outstanding. Management defines cash-on-cash returns as Four Wall EBITDA divided by total net cash investment. Four Wall EBITDA includes store level costs such as product and distribution costs, commissions, occupancy, marketing and other related costs. A definition of net leverage and a related reconciliation to the most directly comparable GAAP financial measure can be found on the Investor Relations section of our website under "Financial Information—Quarterly Results."
These non-GAAP financial measures may not be comparable to similar measures reported by other companies and have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. We address the limitations of the non-GAAP financial measures through the use of various GAAP measures. In the future we will incur expenses or charges such as those added back to calculate adjusted EBITDA or adjusted net income. The presentation of these non-GAAP financial measures should not be construed as an inference that future results will be unaffected by the adjustments used to derive such non-GAAP measures.
We have not reconciled the non-GAAP adjusted EBITDA and diluted adjusted earnings per share forward-looking guidance included in this release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to taxes and non-recurring items, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results. We have also not reconciled the cash-on-cash return forward-looking outlook because such metric includes store-level cash flows and initial capital investment at the individual store level, which are not captured or presented on a GAAP basis. Reconciling this metric to a GAAP measure would require unreasonable efforts and assumptions.
Forward-Looking Statements:
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, the Optimization Plan and its associated activities, costs and benefits, the restructuring plan adopted in fiscal 2025 (the "Restructuring Plan") and its associated benefits, our ability to drive long-term value and business and market trends may constitute forward-looking statements. Words such as "anticipate," "believe," "estimate," "expect," "intend," "may," "outlook," "plan," "project," "seek," "will," and similar expressions, are intended to identify such forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied by any forward-looking statements, including the following: failure of suppliers to consistently supply the Company with opportunistic products at attractive pricing; inability to successfully identify trends and maintain a consistent level of opportunistic products or general inventory; failure to maintain or increase comparable store sales; delay or disruption in funding of benefits provided under government-funded assistance programs, such as the Supplemental Nutrition Assistance Program; any significant disruption to our distribution network, the operations, technology and capacity of our distribution centers and our timely receipt of inventory; risks associated with newly opened stores; risks associated with our growth strategy, including opening, relocating or remodeling stores on schedule and on budget, as well as the revised near-term new store growth strategy as reflected in the Restructuring Plan and Optimization Plan; risks associated with our store refresh initiatives, including that such efforts do not lead to improvements in operating results or are more costly to implement than we anticipate; financial and operating impacts associated with our Optimization Plan; risks related to our plan to operate certain newly opened stores as Company-operated stores; inflation, tariffs and other changes affecting the market prices of the products we sell; failure to maintain our reputation and the value of our brand, including protecting our intellectual property; inability to maintain sufficient levels of cash flow from our operations to fund our growth strategy; risks associated with leasing substantial amounts of space; inability to attract, train and retain highly qualified employees or the loss of executive officers or other key personnel; costs and successful implementation of marketing, advertising and promotions; natural or man-made disasters, climate change, power outages, major health epidemics, pandemic outbreaks, terrorist acts, global political events or other serious catastrophic events and the concentration of our business operations; unexpected costs and negative effects if we incur losses not covered by our insurance program; difficulties associated with labor relations and shortages; failure to participate effectively in the growing online retail marketplace; failure to properly integrate or achieve the expected benefits of any acquired businesses; risks associated with economic conditions; risks associated with uncertainty and changes in U.S. trade policies, including tariffs; competition in the retail food industry; movement of consumer trends toward private labels and away from name-brand products; risks associated with deploying our own private label brands; inability to attract and retain qualified independent operators of the Company ("IOs"); failure of the IOs to successfully manage their business; failure of the IOs to repay notes outstanding to the Company; inability of the IOs to avoid excess inventory shrink; any loss or changeover of an IO; legal proceedings initiated against the IOs; legal challenges to the IO/independent contractor business model; failure to maintain positive relationships with the IOs; risks associated with actions the IOs could take that could harm our business; material disruption to information technology systems, including risks associated from our technology initiatives or third-party security breaches or other disruptions; failure to maintain the security of information we hold, including relating to personal information or payment card data; risks associated with products we and our IOs sell; risks associated with laws and regulations generally applicable to retailers; legal or regulatory proceedings; our substantial indebtedness could affect our ability to operate our business, react to changes in the economy or industry or pay debts and meet obligations; restrictive covenants in our debt agreements may restrict our ability to pursue our business strategies, and failure to comply with any of these restrictions could result in acceleration of our debt; risks associated with tax matters; changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters; and the other factors discussed under "Risk Factors" in our most recent annual report on Form 10-K and in other subsequent reports we file with the United States Securities and Exchange Commission (the "SEC"). Our periodic filings are accessible on the SEC's website at www.sec.gov.
Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. Although we believe that the expectations reflected in the forward-looking statements are reasonable, and our expectations based on third-party information and projections are from sources that management believes to be reputable, we cannot guarantee that future results, levels of activity, performance or achievements. These forward-looking statements are made as of the date of this release or as of the date specified herein and we have based these forward-looking statements on current expectations and projections about future events and trends. Except as required by law, we do not undertake any duty to update any of these forward-looking statements after the date of this release or to conform these statements to actual results or revised expectations.
About Grocery Outlet:
Based in Emeryville, California, Grocery Outlet is a growth-oriented extreme value retailer of quality, name-brand consumables and fresh products sold primarily through a network of independently operated stores. Grocery Outlet and its subsidiaries have more than 540 stores in California, Washington, Oregon, Pennsylvania, Tennessee, Nevada, Idaho, Maryland, North Carolina, Ohio, Virginia, Georgia, New Jersey, Alabama, Delaware and Kentucky.
INVESTOR RELATIONS CONTACTS:
Nicolo Cottarelli
(510) 250-4629
ncottarelli@cfgo.com
Ron Clark
(646) 776-0886
ron@ellipsista.com
| GROCERY OUTLET HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (in thousands, except per share data) (unaudited) | |||||||||||||||
| 13 Weeks Ended | 26 Weeks Ended | ||||||||||||||
| July 4, 2026 | June 28, 2025 | July 4, 2026 | June 28, 2025 | ||||||||||||
| Net sales | $ | 1,192,764 | $ | 1,179,772 | $ | 2,359,116 | $ | 2,305,339 | |||||||
| Cost of sales | 832,046 | 819,079 | 1,653,199 | 1,602,201 | |||||||||||
| Gross profit | 360,718 | 360,693 | 705,917 | 703,138 | |||||||||||
| Selling, general and administrative expenses | 339,524 | 336,764 | 686,546 | 667,842 | |||||||||||
| Restructuring charges, net | 5,428 | 11,157 | 23,619 | 45,032 | |||||||||||
| Goodwill impairment | — | — | 158,000 | — | |||||||||||
| Operating income (loss) | 15,766 | 12,772 | (162,248 | ) | (9,736 | ) | |||||||||
| Interest expense, net | 6,572 | 6,544 | 12,941 | 13,064 | |||||||||||
| Income (loss) before income taxes | 9,194 | 6,228 | (175,189 | ) | (22,800 | ) | |||||||||
| Income tax expense (benefit) | 3,568 | 1,267 | (493 | ) | (4,444 | ) | |||||||||
| Net income (loss) and comprehensive income (loss) | $ | 5,626 | $ | 4,961 | $ | (174,696 | ) | $ | (18,356 | ) | |||||
| Basic earnings (net loss) per share | $ | 0.06 | $ | 0.05 | $ | (1.77 | ) | $ | (0.19 | ) | |||||
| Diluted earnings (net loss) per share | $ | 0.06 | $ | 0.05 | $ | (1.77 | ) | $ | (0.19 | ) | |||||
| Weighted-average shares outstanding: | |||||||||||||||
| Basic | 99,014 | 98,081 | 98,720 | 97,801 | |||||||||||
| Diluted | 99,773 | 98,460 | 98,720 | 97,801 | |||||||||||
| GROCERY OUTLET HOLDING CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) | |||||||
| July 4, 2026 | January 3, 2026 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 74,199 | $ | 69,602 | |||
| Independent operator receivables and current portion of independent operator notes, net of allowance | 14,101 | 16,983 | |||||
| Other accounts receivable, net of allowance | 2,414 | 3,685 | |||||
| Merchandise inventories | 394,841 | 381,961 | |||||
| Prepaid expenses and other current assets | 28,987 | 25,409 | |||||
| Total current assets | 514,542 | 497,640 | |||||
| Independent operator notes and receivables, net of allowance | 37,231 | 43,748 | |||||
| Property and equipment, net | 773,386 | 742,961 | |||||
| Operating lease right-of-use assets | 1,117,595 | 1,089,838 | |||||
| Intangible assets, net | 71,621 | 78,375 | |||||
| Goodwill, net | 475,835 | 633,835 | |||||
| Other assets | 4,255 | 4,702 | |||||
| Total assets | $ | 2,994,465 | $ | 3,091,099 | |||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Trade accounts payable | $ | 219,657 | $ | 177,457 | |||
| Accrued and other current liabilities | 36,822 | 54,277 | |||||
| Accrued compensation | 24,386 | 17,841 | |||||
| Current portion of long-term debt | 15,000 | 15,000 | |||||
| Current lease liabilities | 92,201 | 87,324 | |||||
| Income and other taxes payable | 10,404 | 12,097 | |||||
| Total current liabilities | 398,470 | 363,996 | |||||
| Long-term debt, net | 490,602 | 477,905 | |||||
| Deferred income tax liabilities, net | 32,461 | 33,183 | |||||
| Long-term lease liabilities | 1,253,069 | 1,229,473 | |||||
| Other long-term liabilities | 3,270 | 2,879 | |||||
| Total liabilities | 2,177,872 | 2,107,436 | |||||
| Stockholders' equity: | |||||||
| Common stock | 99 | 98 | |||||
| Series A preferred stock | — | — | |||||
| Additional paid-in capital | 834,673 | 827,048 | |||||
| Retained earnings (deficit) | (18,179 | ) | 156,517 | ||||
| Total stockholders' equity | 816,593 | 983,663 | |||||
| Total liabilities and stockholders' equity | $ | 2,994,465 | $ | 3,091,099 | |||
| GROCERY OUTLET HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) | |||||||
| 26 Weeks Ended | |||||||
| July 4, 2026 | June 28, 2025 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (174,696 | ) | $ | (18,356 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation of property and equipment | 50,966 | 50,832 | |||||
| Amortization of intangible and other assets | 12,305 | 10,399 | |||||
| Amortization of debt issuance costs and debt discounts | 455 | 455 | |||||
| Non-cash rent | (164 | ) | 5,021 | ||||
| Impairment of long-lived assets | 1,413 | 10,776 | |||||
| Goodwill impairment | 158,000 | — | |||||
| Share-based compensation | 7,523 | 7,418 | |||||
| Provision for independent operator and other accounts receivable reserves | 19,480 | 6,578 | |||||
| Deferred income taxes | (722 | ) | (4,693 | ) | |||
| Other | 103 | 1,162 | |||||
| Changes in operating assets and liabilities: | |||||||
| Independent operator and other accounts receivable | (5,322 | ) | (4,561 | ) | |||
| Merchandise inventories | (12,880 | ) | (4,073 | ) | |||
| Prepaid expenses and other assets | (3,724 | ) | (330 | ) | |||
| Income and other taxes payable | (1,693 | ) | (1,403 | ) | |||
| Trade accounts payable | 41,126 | 35,782 | |||||
| Accrued and other liabilities | (3,796 | ) | 20,484 | ||||
| Accrued compensation | 6,545 | 6,068 | |||||
| Operating lease liabilities | 789 | 11,004 | |||||
| Net cash provided by operating activities | 95,708 | 132,563 | |||||
| Cash flows from investing activities: | |||||||
| Advances to independent operators | (5,142 | ) | (7,548 | ) | |||
| Repayments of advances from independent operators | 1,656 | 1,862 | |||||
| Purchases of property and equipment | (94,507 | ) | (119,669 | ) | |||
| Proceeds from sales of assets | 885 | — | |||||
| Investments in intangible assets and licenses | (5,969 | ) | (10,801 | ) | |||
| Net cash used in investing activities | (103,077 | ) | (136,156 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from exercise of stock options | 103 | 395 | |||||
| Proceeds from revolving credit facility | 20,000 | 20,000 | |||||
| Principal payments on revolving credit facility | — | (20,000 | ) | ||||
| Principal payments on senior term loan due 2028 | (7,500 | ) | (3,750 | ) | |||
| Principal payments on finance leases | (637 | ) | (690 | ) | |||
| Net cash provided by (used in) financing activities | 11,966 | (4,045 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 4,597 | (7,638 | ) | ||||
| Cash and cash equivalents at beginning of period | 69,602 | 62,828 | |||||
| Cash and cash equivalents at end of period | $ | 74,199 | $ | 55,190 | |||
| GROCERY OUTLET HOLDING CORP. RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA (in thousands) (unaudited) | |||||||||||||||
| 13 Weeks Ended | 26 Weeks Ended | ||||||||||||||
| July 4, 2026 | June 28, 2025 | July 4, 2026 | June 28, 2025 | ||||||||||||
| Net income (loss) | $ | 5,626 | $ | 4,961 | $ | (174,696 | ) | $ | (18,356 | ) | |||||
| Interest expense, net | 6,572 | 6,544 | 12,941 | 13,064 | |||||||||||
| Income tax expense (benefit) | 3,568 | 1,267 | (493 | ) | (4,444 | ) | |||||||||
| Depreciation and amortization expenses | 32,115 | 31,334 | 63,271 | 61,231 | |||||||||||
| EBITDA | 47,881 | 44,106 | (98,977 | ) | 51,495 | ||||||||||
| Share-based compensation expense | 3,768 | 1,960 | 7,523 | 7,418 | |||||||||||
| Asset impairment and gain or loss on disposition(1) | 601 | 3,834 | 1,904 | 3,969 | |||||||||||
| Acquisition and integration costs(2) | — | 148 | — | 487 | |||||||||||
| Restructuring and related charges(4) | 5,912 | 11,157 | 25,826 | 45,032 | |||||||||||
| Goodwill impairment | — | — | 158,000 | — | |||||||||||
| Other(5) | 7,494 | 6,542 | 14,496 | 11,231 | |||||||||||
| Adjusted EBITDA | $ | 65,656 | $ | 67,747 | $ | 108,772 | $ | 119,632 | |||||||
| GROCERY OUTLET HOLDING CORP. RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME (in thousands, except per share data) (unaudited) | |||||||||||||||
| 13 Weeks Ended | 26 Weeks Ended | ||||||||||||||
| July 4, 2026 | June 28, 2025 | July 4, 2026 | June 28, 2025 | ||||||||||||
| Net income (loss) | $ | 5,626 | $ | 4,961 | $ | (174,696 | ) | $ | (18,356 | ) | |||||
| Share-based compensation expense | 3,768 | 1,960 | 7,523 | 7,418 | |||||||||||
| Asset impairment and gain or loss on disposition(1) | 601 | 3,834 | 1,904 | 3,969 | |||||||||||
| Acquisition and integration costs(2) | — | 148 | — | 487 | |||||||||||
| Amortization of purchase accounting assets and deferred financing costs(3) | 1,269 | 1,269 | 2,537 | 2,537 | |||||||||||
| Restructuring and related charges(4) | 5,912 | 11,157 | 25,826 | 45,032 | |||||||||||
| Goodwill impairment | — | — | 158,000 | — | |||||||||||
| Other(5) | 7,494 | 6,542 | 14,496 | 11,231 | |||||||||||
| Tax adjustment to normalize effective tax rate(6) | 687 | 222 | 3,206 | 3,385 | |||||||||||
| Tax effect of total adjustments(7) | (5,062 | ) | (7,327 | ) | (13,892 | ) | (19,930 | ) | |||||||
| Adjusted net income | $ | 20,295 | $ | 22,766 | $ | 24,904 | $ | 35,773 | |||||||
| GAAP earnings (net loss) per share: | |||||||||||||||
| Basic | $ | 0.06 | $ | 0.05 | $ | (1.77 | ) | $ | (0.19 | ) | |||||
| Diluted | $ | 0.06 | $ | 0.05 | $ | (1.77 | ) | $ | (0.19 | ) | |||||
| Adjusted earnings per share: | |||||||||||||||
| Basic | $ | 0.20 | $ | 0.23 | $ | 0.25 | $ | 0.37 | |||||||
| Diluted | $ | 0.20 | $ | 0.23 | $ | 0.25 | $ | 0.36 | |||||||
| Weighted-average shares outstanding: | |||||||||||||||
| Basic | 99,014 | 98,081 | 98,720 | 97,801 | |||||||||||
| Diluted(8) | 99,773 | 98,460 | 98,720 | 97,801 | |||||||||||
| Non-GAAP weighted-average shares outstanding: | |||||||||||||||
| Basic | 99,014 | 98,081 | 98,720 | 97,801 | |||||||||||
| Diluted(9) | 99,773 | 98,460 | 99,459 | 98,344 | |||||||||||
__________________________
| (1) | Represents non-restructuring asset impairment charges and gains or losses on dispositions of assets. | |
| (2) | Represents costs related to the acquisition and integration of United Grocery Outlet, including due diligence, legal, consulting and retention bonus expenses. | |
| (3) | Represents the incremental amortization of an asset step-up resulting from purchase price accounting related to our acquisition in 2014 by an investment fund affiliated with Hellman & Friedman LLC, our former affiliate, as well as the amortization of debt issuance costs. | |
| (4) | In the second quarter and first half of fiscal 2026, represents net charges associated with the Optimization Plan, including bad debt expense, costs associated with the Lease Exits, costs related to Operator Agreement Terminations, write-offs of merchandise inventory, and other restructuring charges, partially offset by the net write-off of right-of-use lease assets and lease liabilities. In the second quarter and first half of fiscal 2025, represents charges associated with the Restructuring Plan, including lease termination costs, non-cash impairment and disposal of long-lived assets, employee severance and benefit costs, and legal, professional and other related expenses. All such costs are reflected in Restructuring charges, net on the condensed consolidated statements of operations and comprehensive income (loss), except for write-offs of merchandise inventory, which are included in Cost of sales. | |
| (5) | Represents other non-recurring, non-cash or non-operational items, including strategic project costs, certain personnel-related hiring and termination costs, legal settlements and other legal expenses, system implementation costs, costs related to employer payroll taxes associated with equity awards, store closing costs and miscellaneous costs. | |
| (6) | Represents adjustments to normalize the effective tax rate for the impact of unusual or infrequent tax items that we do not consider in our evaluation of ongoing performance, including excess tax benefits or shortfalls related to exercise and/or vesting of share-based awards that are recorded in earnings as discrete items in the reporting period in which they occur. | |
| (7) | Represents the tax effect of the total adjustments. We calculate the tax effect of the total adjustments on a discrete basis excluding any non-recurring and unusual tax items. | |
| (8) | For the first half of fiscal 2026 and the first half of fiscal 2025, there is no difference in the weighted-average shares outstanding used to calculate the basic and diluted GAAP net loss per share due to the Company's net loss. | |
| (9) | To calculate diluted adjusted earnings per share, we adjusted the weighted-average shares outstanding for the dilutive effect of all potential shares of common stock. | |
