Grocery Outlet Holding Corp. reported a net loss of $23.3 million for the first quarter of fiscal 2025, significantly widening from a loss of $1.0 million in the same period last year. The company's net sales increased by 8.5% to $1.13 billion, up from $1.04 billion, driven by the addition of 69 new stores over the past year and a slight increase in comparable store sales of 0.3%. The gross profit rose to $342.4 million, reflecting a gross margin improvement to 30.4% from 29.3% in the prior year, attributed to better inventory management and cost control measures.
The company's selling, general, and administrative expenses (SG&A) also increased by 9.1% to $331.1 million, primarily due to higher store-related costs and corporate expenses associated with the integration of the recently acquired United Grocery Outlet. Notably, Grocery Outlet incurred $33.9 million in restructuring charges during the quarter as part of a strategic plan aimed at optimizing operations and reducing costs. This restructuring plan includes terminating leases for 28 unopened stores and shifting investments towards lower-cost distribution centers.
In terms of operational metrics, Grocery Outlet ended the quarter with 543 stores across 16 states, having opened 11 new locations while closing one. The company reported a significant increase in cash provided by operating activities, totaling $58.9 million, compared to $7.8 million in the prior year. However, cash used in investing activities rose to $68.7 million, reflecting increased capital expenditures related to store openings and supply chain investments.
Looking ahead, Grocery Outlet anticipates opening 33 to 35 net new stores in fiscal 2025, focusing on existing markets and high-priority adjacent markets. The company is also working to address ongoing challenges related to its enterprise resource planning system, which has caused operational disruptions. Despite the current losses, Grocery Outlet remains optimistic about its long-term growth potential, driven by its unique business model and strategic initiatives aimed at enhancing profitability and market presence.
About Grocery Outlet Holding Corp.
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