Grocery Outlet Reports 10.1% Increase in Net Sales for Fiscal 2024, Completes Acquisition of United Grocery Outlet

Grocery Outlet Holding Corp. reported a 10.1% increase in net sales for fiscal 2024, reaching $4.37 billion, compared to $3.97 billion in the previous fiscal year. The company's comparable store sales rose by 2.7%, driven by a 4.2% increase in transaction volume, although this was partially offset by a 1.4% decrease in average transaction size. However, the company experienced a decline in net income, which fell by 50.3% to $39.5 million, or $0.40 per diluted share, down from $79.4 million, or $0.79 per diluted share, in fiscal 2023. This decrease in profitability was attributed to increased selling, general, and administrative expenses, which rose by 11.4% to $1.24 billion, and a decline in gross margin, which decreased by 110 basis points to 30.2%.

In a significant strategic move, Grocery Outlet completed the acquisition of United Grocery Outlet on April 1, 2024, for a total purchase consideration of $62.5 million. This acquisition added 40 stores across six states, expanding the company's footprint into new markets. The company also opened 27 new stores during fiscal 2024, bringing the total number of stores to 533. The acquisition and new store openings are part of Grocery Outlet's long-term growth strategy, which aims to enhance its market presence and customer base.

Operationally, the company faced challenges due to the implementation of a new enterprise resource planning system, which led to disruptions in ordering and inventory management. These issues contributed to a decrease in gross margin and impacted overall sales performance. As part of its restructuring plan initiated in late fiscal 2024, Grocery Outlet aims to optimize its new store growth strategy and reduce costs, including terminating leases for certain unopened stores and shifting investments towards lower-cost distribution centers.

As of December 28, 2024, Grocery Outlet had a total employee count of 2,307, a significant increase from the previous year due to the acquisition of United Grocery Outlet. The company reported cash and cash equivalents of $62.8 million and had $190 million in outstanding borrowings under its revolving credit facility. Looking ahead, Grocery Outlet plans to continue its expansion efforts while navigating the challenges posed by inflation and competitive pricing pressures in the retail market. The company anticipates opening 33 to 35 new stores in fiscal 2025, focusing on existing markets and high-priority adjacent markets to improve sales productivity.