Grocery Outlet Credits Value Offering for Strong Q4, FY22

Retailer expects $3.85-$3.9B in net sales for upcoming fiscal year

2/28/2023

Grocery Outlet CFO Charles Bracher says the company is well-positioned as it moves into FY23.

Deep discounter Grocery Outlet is moving into its new fiscal year following gains in both the fourth quarter, ending Dec. 31, 2022, and its full fiscal year 2022. For Q4, the retailer saw net sales increase by 18.9% to $930.8 million year-over-year, as well as a 15.1% rise in comparable store sales.

Net income rose 139.3% to $15.9 million during the quarter, or $0.16 per diluted share, with adjusted EBITDA increasing 24.3% to $54.3 million. Adjusted net income, meanwhile, rose 31.1% to $22.6 million, or $0.22 per adjusted diluted share. Grocery Outlet opened 10 new stores in Q4, ending with a total of 441 stores across eight states.

"We are very pleased with our fourth quarter results and the strong momentum in our business," said RJ Sheedy, president and CEO of Grocery Outlet. "Our merchandise assortment is better than ever, our pipeline of opportunistic products is healthy, our marketing message of value and savings is resonating with a broad base of consumers, and our Independent Operators are connecting with customers in their stores and throughout their communities.”

Continued Sheedy: “The result is a compelling WOW! shopping experience that is driving strong traffic and spending trends across an expanding base of customers."

For its full FY22, Grocery Outlet saw net sales rise by 16.2% to $3.58 billion and comparable sales increase by 11.8%, driven by a 5.9% boost in the number of transactions combined with a 5.6% increase in average transaction size. The company opened 27 new stores and closed one store during the year. Net income climbed 4.4% to $65.1 million, or $0.65 per diluted share.

Moving into fiscal year 2023, Grocery Outlet expects to open 25 to 28 net new stores with around $155 million in capital expenditures. The grocer also anticipates net sales between $3.85 billion and $3.9 billion and a comparable-store sales increase between 4.5%-5.5%.

"Driven by on our strong business fundamentals, we are well-positioned as we begin fiscal 2023. We expect healthy comp sales growth as customers continue to respond to our value offering and WOW! shopping experience,” said CFO Charles Bracher. “We continue to expand our footprint despite construction challenges, and we expect the pace of openings to accelerate in the second half of the year to our 10% annualized new unit growth rate. In addition, the financial flexibility provided by our new expanded credit facility will further support our strategic objectives and the overall growth of our business for years to come."

Placer.ai recently named Grocery Outlet among its retail brands to watch in 2023. According to Placer.ai, the grocer provides welcome savings during inflationary times, and saw its in-store foot traffic rise 10.1% in the third quarter of 2022 compared to the third quarter of 2021, while visits per venue went up 4.3% during that timeframe.

“The company’s successful cross-country growth proves that customers are willing to look beyond a popular brand when it comes to savings at the till. And with the brand continuing to post impressive earnings and lean into on-demand ordering, 2023 is looking bright,” Placer.ai reported in its white paper on the topic.

Emeryville, Calif.-based Grocery Outlet offers products sold through a network of independently operated stores at more than 400 locations in California, Washington, Oregon, Pennsylvania, Idaho, Nevada, New Jersey and Maryland. The company is No. 70 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.