Grocery Outlet Q3 adjusted EBITDA falls to $59.4M
The revised fiscal 2026 outlook pairs 0.2% to 0.4% comparable-store growth with $225 million to $229 million in adjusted EBITDA.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
8-K
Rhea-AI Filing Summary
Grocery Outlet Holding Corp. reported third-quarter fiscal 2026 net sales of $1.18 billion, up 0.9%, and net income of $13.3 million versus $11.6 million a year earlier. Comparable-store sales rose 0.5%; gross margin was 30.0%, compared with 30.4%. Adjusted EBITDA was $59.4 million versus $66.7 million, and adjusted net income was $15.6 million versus $20.7 million.
For the 39 weeks ended October 3, 2026, net sales rose 1.8% to $3.54 billion, while net loss was $161.4 million versus $6.8 million; the period included a $158.0 million non-cash goodwill impairment. Operating cash flow for the 39 weeks was $113.884 million versus $149.839 million. GO opened 14 stores and closed none in the quarter, ending with 561 stores in 16 states.
Fiscal 2026 guidance now projects 30 to 31 net new store openings, excluding closures under the Optimization Plan; comparable-store sales growth of 0.2% to 0.4%; adjusted EBITDA of $225 million to $229 million; and diluted adjusted EPS of $0.52 to $0.55. The company estimates total net Optimization Plan restructuring charges of $22 million to $29 million, with operational actions and financial impacts expected to be substantially completed by the fourth quarter of fiscal 2027.
2 points · 1 major1 major · 3 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Major point. Forward-looking: it has not happened yet and may not happen.Comparable-store sales guidance is 0.2% to 0.4%, revised from -0.5% to 0.0%.
- Moderate pointThird-quarter net income was $13.3 million, versus $11.6 million.
Negative
- Major point39-week net loss was $161.4 million, versus a $6.8 million loss.
- Moderate pointThird-quarter adjusted EBITDA was $59.4 million, versus $66.7 million.
- Moderate point39-week operating cash flow was $113.884 million, versus $149.839 million.
Filing Explained
Quarterly operating cash generation fell short of net capital spending.
This 8-K reports completed third-quarter results and revised fiscal 2026 guidance: the adjusted EBITDA ceiling fell from
In the quarter, net cash provided by operating activities was
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Third-quarter net sales: $1.18 billion; increased 0.9%
Third-quarter net income: $13.3 million vs. $11.6 million
Third-quarter adjusted EBITDA: $59.4 million vs. $66.7 million
+5 more
8 metrics
Third-quarter net sales
$1.18 billion; increased 0.9%
Third quarter fiscal 2026 compared with the prior-year period
Third-quarter net income
$13.3 million vs. $11.6 million
Third quarter fiscal 2026 and prior-year period
Third-quarter adjusted EBITDA
$59.4 million vs. $66.7 million
Third quarter fiscal 2026 and prior-year period
Third-quarter adjusted net income
$15.6 million vs. $20.7 million
Third quarter fiscal 2026 and prior-year period
39-week net loss
$161.4 million loss vs. $6.8 million loss
39 weeks ended October 3, 2026, compared with the prior-year period
Goodwill impairment
$158.0 million
Non-cash charge in the first quarter of fiscal 2026
39-week operating cash flow
$113.884 million vs. $149.839 million
39 weeks ended October 3, 2026, compared with the prior-year period
Fiscal 2026 adjusted EBITDA guidance
$225 million to $229 million
Current guidance
Key Terms
Comparable store sales, Adjusted EBITDA, Goodwill impairment, Tenant improvement allowances, +1 more
5 terms
Comparable store sales financial
"Comparable store sales increased by 0.5%."
Comparable store sales measure the change in revenue generated by stores that have been open for a certain period, typically at least one year. It helps assess how well a business is growing by showing whether existing stores are attracting more customers and sales, rather than just counting new store openings. Investors use this figure to gauge the true health and performance of a company's core operations over time.
Adjusted EBITDA financial
"Adjusted EBITDA was $59.4 million"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Goodwill impairment financial
"$158.0 million non-cash goodwill impairment charge"
Goodwill impairment occurs when a company’s valued reputation or brand strength, known as goodwill, is found to be worth less than previously recorded on its financial statements. This usually happens when the company's performance declines or market conditions change, signaling that the expected benefits from acquisitions or brand value are no longer as strong. It matters to investors because it can indicate that a company's assets are less valuable than initially thought, potentially affecting its overall financial health.
Tenant improvement allowances financial
"Capital expenditures, net of tenant improvement allowances"
An amount of money a landlord agrees in a lease to provide for the cost of modifying or outfitting a rented commercial space to the tenant’s needs (the "build-out" or "fit-out"). The lease specifies how the allowance is paid (often reimbursed against receipts or paid directly to contractors), what work and costs are eligible, any maximum dollar limit, and what happens to unused funds; the allowance is typically a one-time contribution tied to the lease term and may be treated separately from regular rent or amortized into it.
Cyclospora outbreak medical
"a Cyclospora outbreak associated with certain fresh produce items"
Earnings Snapshot
Net sales: $1.18 billion · Guidance included
Third quarter fiscal 2026 ended October 3, 2026
Net sales
$1.18 billion
increased 0.9%
Comparable store sales
0.5%
increased 0.5%
Gross margin
30.0%
compared with 30.4% last year
Net income
$13.3 million
compared with $11.6 million last year
Adjusted net income
$15.6 million
compared with $20.7 million last year
Adjusted EBITDA
$59.4 million
compared with $66.7 million last year
Guidance
Fiscal 2026: net sales of $4.70 billion to $4.72 billion; comparable store sales increase of 0.2% to 0.4%; adjusted EBITDA of $225 million to $229 million; diluted adjusted earnings per share of $0.52 to $0.55; capital expenditures net of tenant improvement allowances of $170 million; and 30 to 31 net new store openings, excluding store closures related to the Optimization Plan.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were Grocery Outlet (GO)'s sales and net income in Q3 fiscal 2026?
GO reported third-quarter fiscal 2026 net sales of $1.18 billion, up 0.9%, and net income of $13.3 million, compared with $11.6 million in the prior-year period. Comparable-store sales increased 0.5%.
What is GO's fiscal 2026 adjusted EBITDA guidance?
GO's fiscal 2026 adjusted EBITDA guidance is now $225 million to $229 million, compared with previous guidance of $225 million to $235 million. The outlook also lists diluted adjusted earnings per share of $0.52 to $0.55.
Why did Grocery Outlet's gross margin change in Q3 fiscal 2026?
GO said gross margin was 30.0%, compared with 30.4% last year. The company attributed the decline primarily to product promotions, higher transportation expenses, and reduced consumer demand for produce associated with a Cyclospora outbreak affecting certain fresh produce items; a favorable sales mix toward opportunistic products partly offset those factors.
How much did GO spend on capital expenditures in Q3 fiscal 2026?
Capital expenditures were $28.1 million before tenant improvement allowances and $25.7 million net of those allowances. Net capital expenditures were $39.4 million in the same period last year.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
( | ||||||||||||||
| (Registrant's telephone number, including area code) | ||||||||||||||
___________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 10, 2026, Grocery Outlet Holding Corp. (the "Company") announced its financial results for the fiscal quarter ended October 3, 2026. The full text of the press release issued by the Company is furnished as Exhibit 99.1 to this report.
The information in Item 2.02 of this current report on Form 8-K (including Exhibit 99.1 furnished herewith) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |||||||
99.1 | Press release, dated November 10, 2026, entitled "Grocery Outlet Holding Corp. Announces Third Quarter Fiscal 2026 Financial Results." | |||||||
| 104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Grocery Outlet Holding Corp. | |||||||||||||||||
| Date: | November 10, 2026 | By: | /s/ Ian Ferry | ||||||||||||||
| Name: | Ian Ferry | ||||||||||||||||
| Title: | Executive Vice President, Chief Financial Officer and Treasurer | ||||||||||||||||
Exhibit 99.1
Grocery Outlet Holding Corp. Announces Third Quarter Fiscal 2026 Financial Results
Emeryville, CA – November 10, 2026 – Grocery Outlet Holding Corp. (NASDAQ: GO) ("Grocery Outlet," the "Company," "we" or "our") today announced financial results for the third quarter of fiscal 2026 ended October 3, 2026.
Highlights for Third Quarter Fiscal 2026 as compared to the Prior Year Period:
•Net sales increased by 0.9% to $1.18 billion.
•Comparable store sales increased by 0.5%.
•Gross margin was 30.0% compared to 30.4% last year.
•Operating income was $24.0 million, which included $3.6 million in net restructuring credits.
•Net income was $13.3 million, or $0.13 per diluted share, compared to $11.6 million, or $0.12 per diluted share last year. Adjusted net income(1) was $15.6 million, or $0.16 diluted adjusted earnings per share(1), compared to $20.7 million, or $0.21 diluted adjusted earnings per share(1) last year.
•Adjusted EBITDA(1) was $59.4 million, representing 5.0% of net sales.
Highlights for the 39 Weeks Ended October 3, 2026 as compared to the Prior Year Period:
•Net sales increased by 1.8% to $3.54 billion.
•Comparable store sales declined by 0.2%.
•Gross margin was 29.9% compared to 30.5% last year.
•Operating loss was $138.2 million, which included $158.0 million in non-cash goodwill impairment and $20.1 million in net restructuring charges.
•Net loss was $161.4 million, or $(1.63) per diluted share, compared to net loss of $6.8 million, or $(0.07) per diluted share last year. Adjusted net income(1) was $40.5 million, or $0.41 diluted adjusted earnings per share(1), compared to $56.5 million, or $0.57 diluted adjusted earnings per share(1) last year.
•Adjusted EBITDA(1) was $168.2 million, representing 4.8% of net sales.
“In the third quarter we returned to positive comparable store sales, driven by continued improvements to the execution of our opportunistic product offering,” said Jason Potter, President and CEO of Grocery Outlet. “Traffic accelerated and basket trends again improved sequentially as we enhanced our value proposition. In partnership with our operators and suppliers, we will continue to build on this progress with a focus on driving sustainable sales growth and improved profitability over time. This stronger foundation increases our confidence in our long-term opportunity.”
__________________________________
(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.
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Third Quarter Fiscal 2026 Financial Summary
Net sales increased 0.9% to $1.18 billion due to new store sales and a 0.5% increase in comparable store sales, partially offset by decreased sales from store closures as a result of the Optimization Plan as further discussed below. The increase in comparable store sales was driven by a 2.4% increase in the number of transactions, partially offset by a 1.9% decrease in average transaction size. We opened 14 new stores and closed zero stores, ending the quarter with 561 stores in 16 states.
Gross profit decreased slightly to $353.0 million. Gross margin was 30.0%, a decline of 40 basis points due primarily to the impact of product promotions to drive sales, higher transportation expenses, and the impact from a broad reduction in consumer demand for produce as a result of a Cyclospora outbreak associated with certain fresh produce items, partially offset by a favorable shift in sales mix toward opportunistic products.
Selling, general and administrative expenses increased slightly to $332.5 million. As a percentage of net sales, SG&A expenses declined 10 basis points to 28.2%.
Operating income was $24.0 million, which included $3.6 million in net restructuring credits related to the Optimization Plan consisting of $15.8 million in non-cash credits primarily from the net write-off of lease right-of-use assets and lease liabilities, partially offset by $12.2 million in cash charges.
39 Weeks Ended October 3, 2026 Financial Summary
Net sales increased 1.8% to $3.54 billion due to new store sales, partially offset by decreased sales from store closures as a result of the Optimization Plan and a 0.2% decrease in comparable store sales. The decrease in comparable store sales was driven by a 2.3% decrease in average transaction size, partially offset by a 2.1% increase in the number of transactions. We opened 31 new stores and closed 40 stores, including 36 stores as a result of the Optimization Plan.
Gross profit was relatively unchanged at $1.06 billion. Gross margin decreased 60 basis points to 29.9% during the first three quarters, driven primarily by the impact of product promotions to drive sales, inventory markdowns and write-offs associated with the store closures under the Optimization Plan, and higher transportation expenses, partially offset by improvements in inventory management.
Selling, general and administrative expenses increased by 2.0% versus last year to $1.02 billion. As a percentage of net sales, SG&A expenses were relatively unchanged at 28.8% during the first three quarters.
Operating loss was $138.2 million, which included a $158.0 million non-cash goodwill impairment charge during the first quarter of fiscal 2026 as a result of a decline in stock price, and $20.1 million in net restructuring charges related to the Optimization Plan consisting of $29.7 million in cash charges, partially offset by $9.6 million in net non-cash credits primarily from the net write-off of lease right-of-use assets and lease liabilities. The non-cash goodwill impairment charge does not impact future operations.
Cash Flow & Capital Spending:
•Net cash provided by operating activities during the third quarter of fiscal 2026 was $18.2 million compared with $17.3 million for the third quarter last year. The increase in operating cash flow was driven primarily by higher accrued and other liabilities due primarily to timing, partially offset by lower operating lease liabilities as a result of the Optimization Plan.
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•Capital expenditures for the third quarter of fiscal 2026, before tenant improvement allowances, were $28.1 million, a decrease of $16.3 million from the third quarter of fiscal 2025 due to lower spending on current and future new store openings and prior year investments in new warehouses. Capital expenditures, net of tenant improvement allowances, for the third quarter this year, were $25.7 million compared with $39.4 million for the same period last year.
Optimization Plan:
As previously reported, 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"). Under the Optimization Plan, we closed 36 financially underperforming stores ("Closure Stores") in March and April of 2026. We have negotiated, or intend to negotiate, the termination, sublease or assignment of the store leases for the Closure Stores. In addition, we have substantially completed the termination of operator agreements with independent operators for the Closure Stores and certain other store locations (the "Operator Agreement Terminations").
We estimate that we will incur total net restructuring charges under the Optimization Plan of between $22 million and $29 million. We increased our estimated range in the third quarter of fiscal 2026 primarily due to an update in expected lease termination costs and idle property costs. We now expect the operational actions and financial impacts of the Optimization Plan to be substantially completed by the fourth quarter of fiscal 2027.
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 to 33 | 30 to 31 | ||||||
| Net sales | $4.70 to $4.72 billion | $4.70 to $4.72 billion | ||||||
| Comparable store sales increase / decrease | "-0.5% to 0.0%" | 0.2% to 0.4% | ||||||
| Gross margin | 29.8% to 30.0% | 29.8% to 30.0% | ||||||
| Adjusted EBITDA | $225 million to $235 million | $225 million to $229 million | ||||||
| Diluted adjusted earnings per share | $0.51 to $0.55 | $0.52 to $0.55 | ||||||
| Capital expenditures (net of tenant improvement allowances) | $170 million | $170 million | ||||||
__________________________________
(1) Excludes store closures related to the Optimization Plan.
Conference Call Information:
A conference call to discuss the third quarter fiscal 2026 financial results is scheduled for today, November 10, 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 13762409. 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.
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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 (benefit), asset impairment and gain or loss on disposition, acquisition and integration costs, restructuring and related charges, goodwill impairment 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.
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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. This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred and are out of our control or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future 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; 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 related to our plan to operate certain newly opened stores as Company-operated stores; 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; inflation, tariffs, fuel price increases and other changes affecting the market prices of the products we sell as well as the costs we incur in operating our business; 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; the uncertain outcome, timing and expenses of our ongoing strategic review of recently acquired assets; risks associated with economic conditions; risks associated with uncertainty and changes in U.S. trade policies, including tariffs; delay or disruption in funding of benefits provided under government-funded assistance programs, such as the Supplemental Nutrition Assistance Program; 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
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with 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 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 560 stores in California, Washington, Oregon, Pennsylvania, Tennessee, Nevada, Idaho, Virginia, Maryland, North Carolina, Ohio, Georgia, New Jersey, Alabama, Delaware and Kentucky.
INVESTOR RELATIONS CONTACT:
Nicolo Cottarelli
(510) 250-4629
ncottarelli@cfgo.com
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GROCERY OUTLET HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
| 13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||||||||
| October 3, 2026 | September 27, 2025 | October 3, 2026 | September 27, 2025 | ||||||||||||||||||||
| Net sales | $ | 1,178,288 | $ | 1,168,153 | $ | 3,537,404 | $ | 3,473,492 | |||||||||||||||
| Cost of sales | 825,285 | 813,017 | 2,478,484 | 2,415,218 | |||||||||||||||||||
| Gross profit | 353,003 | 355,136 | 1,058,920 | 1,058,274 | |||||||||||||||||||
| Selling, general and administrative expenses | 332,524 | 331,016 | 1,019,070 | 998,858 | |||||||||||||||||||
| Restructuring charges (credits), net | (3,562) | 1,296 | 20,057 | 46,328 | |||||||||||||||||||
| Goodwill impairment | — | — | 158,000 | — | |||||||||||||||||||
| Operating income (loss) | 24,041 | 22,824 | (138,207) | 13,088 | |||||||||||||||||||
| Interest expense, net | 7,045 | 6,705 | 19,986 | 19,769 | |||||||||||||||||||
| Income (loss) before income taxes | 16,996 | 16,119 | (158,193) | (6,681) | |||||||||||||||||||
| Income tax expense | 3,707 | 4,514 | 3,214 | 70 | |||||||||||||||||||
| Net income (loss) and comprehensive income (loss) | $ | 13,289 | $ | 11,605 | $ | (161,407) | $ | (6,751) | |||||||||||||||
| Basic earnings (net loss) per share | $ | 0.13 | $ | 0.12 | $ | (1.63) | $ | (0.07) | |||||||||||||||
| Diluted earnings (net loss) per share | $ | 0.13 | $ | 0.12 | $ | (1.63) | $ | (0.07) | |||||||||||||||
| Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | 99,145 | 98,160 | 98,862 | 97,921 | |||||||||||||||||||
| Diluted | 100,288 | 98,705 | 98,862 | 97,921 | |||||||||||||||||||
7
GROCERY OUTLET HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
| October 3, 2026 | January 3, 2026 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 59,832 | $ | 69,602 | |||||||
| Independent operator receivables and current portion of independent operator notes, net of allowance | 16,428 | 16,983 | |||||||||
| Other accounts receivable, net of allowance | 4,649 | 3,685 | |||||||||
| Merchandise inventories | 408,133 | 381,961 | |||||||||
| Prepaid expenses and other current assets | 27,165 | 25,409 | |||||||||
| Total current assets | 516,207 | 497,640 | |||||||||
| Independent operator notes and receivables, net of allowance | 36,541 | 43,748 | |||||||||
| Property and equipment, net | 777,648 | 742,961 | |||||||||
| Operating lease right-of-use assets | 1,104,032 | 1,089,838 | |||||||||
| Intangible assets, net | 68,844 | 78,375 | |||||||||
Goodwill, net | 475,835 | 633,835 | |||||||||
| Other assets | 4,105 | 4,702 | |||||||||
| Total assets | $ | 2,983,212 | $ | 3,091,099 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Trade accounts payable | $ | 200,843 | $ | 177,457 | |||||||
| Accrued and other current liabilities | 50,192 | 54,277 | |||||||||
| Accrued compensation | 22,786 | 17,841 | |||||||||
| Current portion of long-term debt | 15,000 | 15,000 | |||||||||
| Current lease liabilities | 94,840 | 87,324 | |||||||||
| Income and other taxes payable | 13,681 | 12,097 | |||||||||
| Total current liabilities | 397,342 | 363,996 | |||||||||
| Long-term debt, net | 486,951 | 477,905 | |||||||||
| Deferred income tax liabilities, net | 36,051 | 33,183 | |||||||||
| Long-term lease liabilities | 1,225,256 | 1,229,473 | |||||||||
| Other long-term liabilities | 3,561 | 2,879 | |||||||||
| Total liabilities | 2,149,161 | 2,107,436 | |||||||||
| Stockholders' equity: | |||||||||||
| Common stock | 99 | 98 | |||||||||
| Series A preferred stock | — | — | |||||||||
| Additional paid-in capital | 838,842 | 827,048 | |||||||||
| Retained earnings (deficit) | (4,890) | 156,517 | |||||||||
| Total stockholders' equity | 834,051 | 983,663 | |||||||||
| Total liabilities and stockholders' equity | $ | 2,983,212 | $ | 3,091,099 | |||||||
8
GROCERY OUTLET HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| 39 Weeks Ended | |||||||||||
| October 3, 2026 | September 27, 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (161,407) | $ | (6,751) | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation of property and equipment | 76,997 | 78,089 | |||||||||
| Amortization of intangible and other assets | 18,146 | 16,532 | |||||||||
| Amortization of debt issuance costs and debt discounts | 683 | 683 | |||||||||
| Non-cash rent | (838) | 6,146 | |||||||||
| Impairment of long-lived assets | 1,413 | 11,511 | |||||||||
| Goodwill impairment | 158,000 | — | |||||||||
| Share-based compensation | 11,160 | 7,408 | |||||||||
| Provision for independent operator notes and receivables and other accounts receivable reserves | 23,608 | 9,278 | |||||||||
| Deferred income taxes | 2,868 | 417 | |||||||||
| Other | (299) | 1,377 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Independent operator and other accounts receivable | (10,803) | (5,288) | |||||||||
| Merchandise inventories | (26,172) | (23,694) | |||||||||
| Prepaid expenses and other assets | (1,914) | (1,157) | |||||||||
| Income and other taxes payable | 1,584 | 1,927 | |||||||||
| Trade accounts payable | 23,579 | 21,566 | |||||||||
| Accrued and other liabilities | 2,220 | 9,679 | |||||||||
| Accrued compensation | 4,945 | 7,665 | |||||||||
| Operating lease liabilities | (9,886) | 14,451 | |||||||||
| Net cash provided by operating activities | 113,884 | 149,839 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Advances to independent operators | (8,699) | (10,855) | |||||||||
| Repayments of advances from independent operators | 2,692 | 3,165 | |||||||||
| Purchases of property and equipment | (119,774) | (158,513) | |||||||||
| Proceeds from sales of assets | 2,445 | — | |||||||||
| Investments in intangible assets and licenses | (8,790) | (16,368) | |||||||||
| Net cash used in investing activities | (132,126) | (182,571) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from exercise of stock options | 635 | 565 | |||||||||
| Proceeds from revolving credit facility | 35,000 | 50,000 | |||||||||
| Principal payments on revolving credit facility | (15,000) | (20,000) | |||||||||
| Principal payments on senior term loan due 2028 | (11,250) | (7,500) | |||||||||
| Principal payments on finance leases | (913) | (1,036) | |||||||||
| Net cash provided by financing activities | 8,472 | 22,029 | |||||||||
| Net decrease in cash and cash equivalents | (9,770) | (10,703) | |||||||||
| Cash and cash equivalents at beginning of period | 69,602 | 62,828 | |||||||||
| Cash and cash equivalents at end of period | $ | 59,832 | $ | 52,125 | |||||||
9
GROCERY OUTLET HOLDING CORP.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
(in thousands)
(unaudited)
| 13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||||||||
| October 3, 2026 | September 27, 2025 | October 3, 2026 | September 27, 2025 | ||||||||||||||||||||
Net income (loss) | $ | 13,289 | $ | 11,605 | $ | (161,407) | $ | (6,751) | |||||||||||||||
| Interest expense, net | 7,045 | 6,705 | 19,986 | 19,769 | |||||||||||||||||||
Income tax expense | 3,707 | 4,514 | 3,214 | 70 | |||||||||||||||||||
| Depreciation and amortization expenses | 31,872 | 33,390 | 95,143 | 94,621 | |||||||||||||||||||
| EBITDA | 55,913 | 56,214 | (43,064) | 107,709 | |||||||||||||||||||
| Share-based compensation expense (benefit) | 3,637 | (10) | 11,160 | 7,408 | |||||||||||||||||||
Asset impairment and gain or loss on disposition (1) | — | 1,046 | 1,904 | 5,015 | |||||||||||||||||||
Acquisition and integration costs (2) | — | 551 | — | 1,038 | |||||||||||||||||||
Restructuring and related charges (credits), net (4) | (3,562) | 1,296 | 22,264 | 46,328 | |||||||||||||||||||
Goodwill impairment | — | — | 158,000 | — | |||||||||||||||||||
Other (5) | 3,438 | 7,571 | 17,934 | 18,802 | |||||||||||||||||||
| Adjusted EBITDA | $ | 59,426 | $ | 66,668 | $ | 168,198 | $ | 186,300 | |||||||||||||||
10
GROCERY OUTLET HOLDING CORP.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME
(in thousands, except per share data)
(unaudited)
| 13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||||||||
| October 3, 2026 | September 27, 2025 | October 3, 2026 | September 27, 2025 | ||||||||||||||||||||
Net income (loss) | $ | 13,289 | $ | 11,605 | $ | (161,407) | $ | (6,751) | |||||||||||||||
| Share-based compensation expense (benefit) | 3,637 | (10) | 11,160 | 7,408 | |||||||||||||||||||
Asset impairment and gain or loss on disposition (1) | — | 1,046 | 1,904 | 5,015 | |||||||||||||||||||
Acquisition and integration costs (2) | — | 551 | — | 1,038 | |||||||||||||||||||
Amortization of purchase accounting assets and deferred financing costs (3) | 1,268 | 1,268 | 3,805 | 3,805 | |||||||||||||||||||
Restructuring and related charges (credits), net (4) | (3,562) | 1,296 | 22,264 | 46,328 | |||||||||||||||||||
Goodwill impairment | — | — | 158,000 | — | |||||||||||||||||||
Other (5) | 3,438 | 7,571 | 17,934 | 18,802 | |||||||||||||||||||
Tax adjustment to normalize effective tax rate (6) | (1,249) | (649) | 1,957 | 2,736 | |||||||||||||||||||
Tax effect of total adjustments (7) | (1,254) | (1,991) | (15,146) | (21,921) | |||||||||||||||||||
| Adjusted net income | $ | 15,567 | $ | 20,687 | $ | 40,471 | $ | 56,460 | |||||||||||||||
GAAP earnings (net loss) per share: | |||||||||||||||||||||||
| Basic | $ | 0.13 | $ | 0.12 | $ | (1.63) | $ | (0.07) | |||||||||||||||
| Diluted | $ | 0.13 | $ | 0.12 | $ | (1.63) | $ | (0.07) | |||||||||||||||
| Adjusted earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.16 | $ | 0.21 | $ | 0.41 | $ | 0.58 | |||||||||||||||
| Diluted | $ | 0.16 | $ | 0.21 | $ | 0.41 | $ | 0.57 | |||||||||||||||
Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | 99,145 | 98,160 | 98,862 | 97,921 | |||||||||||||||||||
Diluted (8) | 100,288 | 98,705 | 98,862 | 97,921 | |||||||||||||||||||
Non-GAAP weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | 99,145 | 98,160 | 98,862 | 97,921 | |||||||||||||||||||
Diluted (9) | 100,288 | 98,705 | 99,735 | 98,464 | |||||||||||||||||||
11
__________________________
(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 third quarter and first three quarters of fiscal 2026, represents net charges (credits) associated with the Optimization Plan, including costs associated with the termination, sublease or assignment of the store leases for the Closure Stores, bad debt expense, 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 assets and lease liabilities and other non-cash restructuring credits. In the third quarter and first three quarters 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 (credits), 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, store closing costs, costs related to employer payroll taxes associated with equity awards, 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 three quarters of fiscal 2026 and the first three quarters 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.
12