Grocery Outlet Reports $180.3 Million Net Loss in Q1 Fiscal 2026 Amid Restructuring Efforts

Grocery Outlet Holding Corp. reported a net loss of $180.3 million for the first quarter of fiscal 2026, significantly higher than the $23.3 million loss recorded in the same period last year. This loss translates to a basic and diluted net loss per share of $1.83, compared to a loss of $0.24 per share in the prior year. The substantial increase in net loss was primarily driven by a goodwill impairment charge of $158 million and restructuring charges of $18.2 million associated with the company's Optimization Plan, which aims to enhance profitability and operational efficiency.

In terms of financial performance, Grocery Outlet's net sales increased by 3.6% to $1.17 billion, up from $1.13 billion in the first quarter of fiscal 2025. However, comparable store sales declined by 1.0%, attributed to a 3.1% decrease in average transaction size, partially offset by a 2.1% increase in the number of transactions. The gross margin for the quarter was 29.6%, down from 30.4% in the previous year, reflecting the impact of inventory markdowns and write-offs related to the closure of underperforming stores.

The company has been actively restructuring its operations, closing 28 stores, including 27 as part of the Optimization Plan, while opening seven new stores, bringing the total to 549 locations across 16 states. The restructuring efforts are expected to incur between $20 million and $27 million in charges over the next two fiscal years. The company has also increased its provision for independent operator notes and receivables reserves by $15.5 million, reflecting the financial impact of the store closures.

Grocery Outlet's cash and cash equivalents stood at $59 million as of April 4, 2026, down from $69.6 million at the beginning of the fiscal year. The company has a revolving credit facility with a borrowing capacity of $400 million, of which $220 million was drawn as of the end of the quarter. The company anticipates that its existing cash, operating cash flows, and available credit will be sufficient to meet its liquidity needs in the near term.

Looking ahead, Grocery Outlet plans to open 30 to 33 net new stores in fiscal 2026, excluding the closures related to the Optimization Plan. The company is focused on enhancing its value proposition through increased promotional activities and opportunistic product offerings, despite facing challenges from macroeconomic conditions and competitive pricing pressures. The management remains optimistic about the long-term growth potential of the business, contingent on the successful execution of its strategic initiatives.