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Grocery Outlet Holding Corp. (GO)·Q3 2026 Earnings Summary

Executive Summary

  • Q3 results showed modest top-line growth and profitability at the high end of internal ranges, but comps underperformed outlook and gross margin dipped YoY due to promotions; adjusted EPS was $0.21 and adjusted EBITDA $66.7M .
  • Management tightened FY25 guidance: net sales to $4.70–$4.72B, comps to 0.6–0.9%, gross margin to 30.3–30.4%, adjusted EBITDA to $258–$262M, and raised adjusted EPS to $0.78–$0.80; net new stores increased to 37 .
  • Strategic focus: store refresh program (pilot stores delivering mid-single-digit comp lift), expanded core assortment (~400 items), stronger value messaging, and enhanced IO tools; rollout begins Q4 with ~20 stores in FY25 and 150+ by end of 2026 .
  • Near-term catalysts: execution of refresh clustering, fresh departments re-merchandising (double-digit lift in meat/produce in pilots), and marketing mix reset; watch SNAP funding dynamics (≈9% of sales via EBT) not included in guidance .
  • Note: Primary source documents for Q3 2026 were not available in our dataset; analysis references Q3 2025 actuals and S&P Global consensus for Q3 2026 estimates.*

What Went Well and What Went Wrong

What Went Well

  • Store refresh pilots drove mid-single-digit comp uplift, with double-digit growth in meat and produce; management plans broad rollout starting Q4 and accelerating through 2026 .
  • Inventory visibility tools (real-time order guide and new-arrival guide) improved in-stock performance; focus stores saw ≈200 bps comp lift on top 200 items from better in-stock execution .
  • FY25 adjusted EPS guidance raised to $0.78–$0.80 and gross margin guided to 30.3–30.4% (upper end of prior range) despite promotional pressure .

Quote: “We made progress on our key initiatives while delivering strong bottom-line results… pilot stores in the refresh program are seeing impressive results.” — Jason Potter, CEO .

What Went Wrong

  • Comparable store sales were +1.2%, below the 1.5–2.0% outlook; late-quarter promotional and marketing mix tests were “net negative” for traffic and basket .
  • Gross margin fell 70 bps YoY to 30.4% on promotions and seasonal markdowns; adjusted EBITDA margin was 5.7%, down 80 bps YoY .
  • SG&A rose 8.7% (+80 bps as % of sales) driven by new store growth costs, software amortization, and incentives; restructuring charges continued ($1.3M in Q3) though plan largely complete .

Financial Results

Core P&L and Margins (Actuals)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$1,125.6 $1,179.8 $1,168.2
GAAP Diluted EPS ($)$(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

KPIs and Store Base (Actuals)

KPIQ1 2025Q2 2025Q3 2025
Comparable Store Sales (%)+0.3% +1.1% +1.2%
Transactions YoY (%)+2.3% +1.5% +1.8%
Avg Transaction Size YoY (%)−2.0% −0.4% −0.6%
New Stores (Net Additions)+10 net (11 open/1 close) +9 net (11 open/2 close) +11 net (13 open/2 close)
Ending Store Count543 552 563

Actual vs S&P Global Consensus (Q3 2025)

MetricConsensusActualBeat/Miss
Revenue ($USD Millions)1,179.3*1,168.2 Miss
Primary EPS ($)0.188*0.21 Beat
EBITDA ($USD Millions)67.5*56.2 (GAAP EBITDA) Miss

Values retrieved from S&P Global.*

Forward Consensus (S&P Global) — Q1–Q3 2026

MetricQ1 2026Q2 2026Q3 2026
Revenue ($USD Millions)1,203.2*1,261.3*1,247.6*
Primary EPS ($)0.144*0.245*0.248*
EBITDA ($USD Millions)58.9*74.3*74.5*
Gross Margin (%)30.49%*30.73%*30.64%*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net New StoresFY 202533–35 37 Raised
Net Sales ($USD Billions)FY 2025$4.7–$4.8 $4.70–$4.72 Narrowed/Lowered mid
Comparable Store Sales (%)FY 20251.0–2.0 0.6–0.9 Lowered
Gross Margin (%)FY 202530.0–30.5 30.3–30.4 Raised mid/upper
Adjusted EBITDA ($USD Millions)FY 2025260–270 258–262 Slightly Lowered
Adjusted EPS ($)FY 20250.75–0.80 0.78–0.80 Raised low end
Capex (Net, $USD Millions)FY 2025210 210 Maintained
Q4 2025 Guide (Comps)Q4 2025N/AFlat to +1% New disclosure
Q4 2025 Guide (Gross Margin %)Q4 2025N/A30.0–30.3 New disclosure
Q4 2025 Guide (Adj. EBITDA $M)Q4 2025N/A72–76 New disclosure
Q4 2025 Guide (Adj. EPS $)Q4 2025N/A0.21–0.23 New disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Store refresh & merchandisingModel store concept; focus on pricing/quality/service; KPIs tightening Oakland test delivering mid-single-digit comp; rollout pilots Mid-single-digit comp lift in pilots; clustering; ~20 stores by YE, 150+ by 2026 Accelerating rollout
IO tools & systemsReal-time order guide rollout; in-stock improvement >99% fill rates New-arrival guide; ~200 bps comp lift on top 200 SKUs New-arrival guide introduced; forecasting tools for fresh; training Broader deployment
Supply chainPNW DC consolidation; East DC activation planned PNW transition “executed flawlessly”; East conversion in Q4 Continued execution; supportive of refresh Execution improving
Marketing mix/value messagingExperimenting with in-store value communication Storytelling on value; basket-wide price gaps favorable Late-Q3 marketing mix/promo tests hurt comps; reset for Q4 Course-corrected
Macro/SNAPBasket softness; macro uncertainty Recession/trade-down preparedness SNAP ~9% of sales; shutdown risk excluded from guide Monitoring risk

Management Commentary

  • “Pilot stores… are seeing impressive results. We plan to expand the refresh program with a broad rollout starting in the fourth quarter.” — Jason Potter, CEO .
  • “Adjusted EBITDA of $67M at the top of our outlook range and adjusted EPS of $0.21, which exceeded guidance due to favorable taxes.” — Jason Potter, CEO .
  • “We now expect comp store sales for the year to be in the range of 0.6%–0.9%… net sales of $4.7–$4.72B… adjusted EPS of $0.78–$0.80.” — Chris Miller, CFO .
  • “We remain 15%–20% lower than discount and 35%–40% lower than conventional on basket checks.” — Jason Potter, CEO .
  • “Around 2.5% comp growth is required to leverage SG&A.” — Chris Miller, CFO .

Q&A Highlights

  • Comps shortfall drivers: Promotional timing and marketing channel mix changes drove late-Q3 weakness; mix reset underway with recent weekly comps positive .
  • Refresh rollout logistics: Clustering strategy to amplify awareness and leverage labor; ~5-week execution per store with immediate post-reline sales pop .
  • Fresh departments uplift: Double-digit comp increases in meat and produce in test stores; core assortment standardization (~400 items) to build basket .
  • Pricing position: Sustained price gaps vs peers; focus on value messaging to reinforce proposition without broad price cuts .
  • SNAP uncertainty: ~9% of sales via EBT; potential disruption excluded from guidance; monitoring for material impacts .

Estimates Context

  • Q3 2025: Revenue missed consensus ($1,168M vs $1,179M*), Primary EPS beat ($0.21 vs $0.188*); EBITDA missed consensus on GAAP basis (actual $56.2M vs $67.5M*) .
  • Q3 2026: Street expects revenue ~$1.248B*, EPS ~$0.248*, EBITDA ~$74.5M*, and gross margin ~30.64%; any deviation will likely hinge on refresh rollout efficacy, gross margin discipline, and marketing mix normalization.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Store refresh is the core comp accelerator; evidence from pilots suggests mid-single-digit uplift with clustering and fresh re-merchandising providing immediate post-execution benefits .
  • Near-term comp trajectory depends on marketing mix discipline and value messaging; management has reset approach after late-Q3 tests proved net negative .
  • Gross margin guided to upper end of range despite promotions, supported by inventory management improvements; watch for mix of opportunistic buys and private label to sustain margins .
  • SG&A leverage requires ~2.5% comps; cost savings identified ($15–$20M over two years) should partly offset reinvestment, aiding 2026 leverage prospects .
  • Guidance implies stable profitability with higher adjusted EPS range; monitor Q4 execution (flat to +1% comps) and potential SNAP-related volatility not included in outlook .
  • For Q3 2026, consensus implies solid sequential EPS/EBITDA; the refresh rollout cadence and margin performance are likely to be primary stock drivers.*

Citations:

  • Q3 2025 8-K press release and financials: .
  • Q3 2025 earnings call transcript: .
  • Q2 2025 press release and transcript: .
  • Q1 2025 8-K and transcript: .

Values retrieved from S&P Global.*