Grocery Outlet (GO) investor relations material

Executive summary

• Net sales rose 3.6% year-over-year to $1.17 billion, driven by new store openings, while comparable store sales declined 1.0% due to a 3.1% drop in average transaction size, partially offset by a 2.1% increase in transaction count.

• Operating loss reached $178.0 million, primarily due to a $158.0 million non-cash goodwill impairment and $18.2 million in restructuring charges related to the Optimization Plan.

• Adjusted EBITDA was $43.1 million (3.7% of net sales), at the top end of guidance but down 16.9% year-over-year.

• Adjusted net income was $4.6 million ($0.05 per share), down from $13.0 million ($0.13 per share) last year.

• Strategic focus on restoring value perception, improving in-store experience, and supporting independent operators.

Financial highlights

• Gross margin declined to 29.6% from 30.4% year-over-year, impacted by inventory markdowns, write-offs from store closures, and increased promotional activity.

• SG&A expenses increased 4.8% to $347.0 million, mainly due to higher store commissions, occupancy, and professional fees.

• Net loss was $180.3 million ($1.83 per share), primarily due to restructuring charges and goodwill impairment.

• Net cash from operating activities was $52.6 million, down from $58.9 million last year.

• Capital expenditures were $56.8 million in Q1; full-year CapEx expected at $170 million.

Outlook and guidance

• Fiscal 2026 guidance: net sales of $4.60–$4.72 billion, comparable store sales change of -2.0% to 0.0%, gross margin of 29.7%–30.0%.

• Adjusted EBITDA expected between $220 million and $235 million; diluted adjusted EPS of $0.45–$0.55.

• Plans to open 30–33 net new stores in fiscal 2026, excluding closures from the Optimization Plan.

• Promotional investments of $20 million for the year, with spend tapering in the second half.

• Estimated $20–$27 million in total restructuring charges expected through fiscal 2027.