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Grocery Outlet Holding Corp. (GO)·Q2 2026 Earnings Summary

Executive Summary

  • As of November 20, 2025, Grocery Outlet has not yet reported Q2 2026; this recap anchors on the latest available quarter (Q2/Q3 2025) and S&P Global consensus for Q2 2026 to frame expectations and trajectory .
  • Q2 2025 delivered mixed results: net sales rose 4.5% to $1.18B, comps +1.1%, and adjusted EPS $0.23, while GAAP EPS was $0.05 due to restructuring charges; FY2025 adjusted EPS guidance was raised to $0.75–$0.80, a key positive catalyst .
  • Q3 2025 comps remained modest (+1.2%) with gross margin at 30.4%, adjusted EPS $0.21; management flagged 2026 modeling items (53rd-week benefit won’t repeat; incentive comp headwind), setting context for consensus expectations into Q2 2026 .
  • Consensus for Q2 2026 points to EPS ~$0.245 and revenue ~$1.261B, implying continued top-line growth and earnings normalization against 2025 restructuring noise*.

What Went Well and What Went Wrong

What Went Well

  • Raised FY2025 adjusted EPS guidance to $0.75–$0.80 (from $0.70–$0.75) on lower interest expense and cost actions; adjusted EPS in Q2 2025 was $0.23, above consensus .
  • Supply chain initiative “One DC” in the Pacific Northwest executed “flawlessly,” supporting service levels and lower costs, with next DC conversion slated for the East in Q4 2025 .
  • Traffic-led comp growth sustained: Q2 2025 transactions +1.5% drove comps +1.1%; Q3 2025 transactions +1.8% drove comps +1.2% .

What Went Wrong

  • Gross margin modestly compressed YoY in Q2 2025 (30.6% vs 30.9%) due to pricing adjustments on everyday staples; Q3 2025 gross margin remained below prior year (30.4% vs 31.1%) .
  • Restructuring charges weighed on GAAP profitability: Q2 2025 operating income included $11.2M of charges; Q3 2025 included $1.3M, limiting GAAP EPS (Q2: $0.05; Q3: $0.12) .
  • Average basket size declined modestly while transactions rose, indicating continued value-seeking behavior and price sensitivity impacting mix and margin .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Net Sales ($USD Billions)$1.13 $1.18 $1.17
GAAP Diluted EPS ($)($0.24) $0.05 $0.12
Adjusted Diluted EPS ($)$0.13 $0.23 $0.21
Gross Margin %30.4% 30.6% 30.4%
Adjusted EBITDA ($USD Millions)$51.9 $67.7 $66.7
Comparable Store Sales %+0.3% +1.1% +1.2%
Stores (ending)543 552 563
Estimates vs ActualsQ2 2025Q3 2025Q2 2026 (Est.)
EPS Actual ($)$0.23 $0.21 —
EPS Consensus ($)0.1731*0.1884*0.2450*
EPS Surprise ($)+$0.06+$0.02—
Revenue Actual ($USD)$1,179,772,000 $1,168,153,000 —
Revenue Consensus ($USD)1,187,607,230*1,179,270,600*1,261,265,370*
Revenue Surprise ($)-$7.84M-$11.12M—

Values marked with * were retrieved from S&P Global.

Segment breakdown: Grocery Outlet reports as a single retail segment; no segment revenue table is applicable .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted Adjusted EPSFY 2025$0.70–$0.75 $0.75–$0.80 Raised
Net SalesFY 2025$4.7B–$4.8B $4.7B–$4.8B Maintained
Comparable Store SalesFY 2025+1.0%–2.0% +1.0%–2.0% Maintained
Gross MarginFY 202530.0%–30.5% 30.0%–30.5% Maintained
Adjusted EBITDAFY 2025$260M–$270M $260M–$270M Maintained
Capital Expenditures (net of TIAs)FY 2025$210M $210M Maintained

Management noted 2026 modeling items: 2025’s 53rd week adds ~$9M to adjusted EBITDA and ~10 bps to margin and will not repeat; expected $10–$13M headwind from normalized cash incentive compensation in 2026 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q2 2026)Trend
Supply chain/DC consolidationSystems transition progressing; margin outlook improving “Transition to One DC… executed flawlessly”; East DC conversion to begin in Q4 Not yet reportedExecution improving; expected cost leverage into 2026
Pricing/value propositionGross margin +110 bps YoY; comps +0.3% on traffic Everyday staple price investments compressed margin (30.6%) Not yet reportedOngoing balance between margin and traffic
Store refresh/model storeFoundation work to improve returns; slate of openings Emphasis on “outstanding selling organization,” clustered openings Not yet reportedBuilding toward 2026 comp acceleration
Private label/core assortmentPrivate label rollout began 2H 2024 Continued assortment improvements Not yet reportedMargin support and inventory consistency
Restructuring plan$33.9M Q1 charges; plan underway $11.2M Q2 charges; substantially complete Not yet reportedCharges winding down; savings expected 2026

Management Commentary

  • “We delivered solid second quarter results that exceeded our outlook. Net sales of $1.18 billion grew 4.5% over last year…” — Jason Potter, President & CEO .
  • “Our transition to One DC in the Pacific Northwest has been executed flawlessly… improving service levels to our IOs at a lower cost.” — Management prepared remarks, Q2 2025 .
  • “We are affirming our outlook for the year except for adjusted EPS, which we are increasing due primarily to favorable interest expense.” — Q2 2025 call .

Q&A Highlights

  • Comps trajectory and basket: Management indicated comps improvement consistent with guidance; basket remains pressured by value investments, with transactions driving comps .
  • Fresh categories uplift: Test stores saw double-digit growth in meat and produce, with total comp mid-single digits, pointing to category strategies for basket expansion .
  • Restructuring savings cadence: Actions are “substantially complete,” with meaningful net savings expected in 2026, partly reinvested to support IOs and growth .

Estimates Context

  • Q2 2025: EPS $0.23 vs consensus $0.1731 (beat); revenue $1.180B vs $1.188B (miss)*.
  • Q3 2025: EPS $0.21 vs consensus $0.1884 (beat); revenue $1.169B vs $1.179B (miss)*.
  • Q2 2026: Consensus EPS ~$0.245 and revenue ~$1.261B, reflecting anticipated comp normalization and operational efficiencies*.

Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • FY2025 guidance raise on adjusted EPS was a notable positive and signals confidence in cost actions and interest expense tailwinds; watch for continued margin balance vs traffic in 2026 .
  • Supply chain/DC consolidation is a tangible cost lever; successful One DC execution and upcoming East conversion should support margin structure into FY2026 .
  • Restructuring is near completion; expect lower GAAP noise and potential net savings in 2026, though normalized incentive comp and loss of the 53rd-week benefit temper year-over-year comps/EPS modeling .
  • KPIs show resilient traffic; focus areas remain basket growth via fresh/category strategies and private label expansion to sustain margin and loyalty .
  • Short-term: Trade the guidance narrative and execution on DC conversion; monitor comps cadence and gross margin vs promotional intensity.
  • Medium-term: Thesis hinges on margin recapture, disciplined store growth (cluster strategy), and IO enablement tools improving in-stocks and sales conversion .

Note: Q2 2026 primary source documents (8-K 2.02 press release, earnings call transcript, contemporaneous press releases) are not yet available as of November 20, 2025; this recap synthesizes Q2/Q3 2025 reported data and Q2 2026 S&P Global consensus to prepare for the upcoming quarter .