Grocery Outlet’s Q2 Shows ‘Continued Momentum’

Reporting its financial results for the second quarter of fiscal 2022 ended July 2, Grocery Outlet Holding Corp. revealed a net sales increase of 15.7% to $897.7 million versus the year-ago period, comparable-store sales increases of 11.2% from last year and 17.9% on a three-year stacked basis, and the opening of seven new stores, for a total of 425 locations in eight states at the end of the quarter.

The extreme-value retailer also reported that its Q2 net income increased 2.3% to $20.1 million, or 20 cents per diluted share; its adjusted EBITDA grew 18.3% to $60.1 million; and its adjusted net income rose 23.6% to $28.9 million, or 29 cents per adjusted diluted share.

“We are extremely pleased with our second-quarter performance and the continued momentum in our business,” noted Grocery Outlet CEO Eric Lindberg. “Our mission of Touching Lives for the Better has always been firmly rooted in providing customers access to affordable-quality food at unbeatable savings. As consumers are faced with record levels of inflation, our business is well positioned to help them stretch their budgets. I would like to thank our talented independent operators and team members for their tireless commitment to that mission.”

For the 26 weeks ended July 2, Grocery Outlet reported that net sales increased 13.2% to $1.73 billion; comps rose 8.2% from last year and 16.1% on a three-year stacked basis; net income declined 17.8% to $31.7 million, or 32 cents per diluted share; adjusted EBITDA grew 9.7% to $109.4 million; and adjusted net income increased 8.4% to $50.4 million, 50 cents per adjusted diluted share.

Additionally, Grocery Outlet’s capital expenditures for the second quarter of fiscal 2022, before the impact of tenant improvement allowances, came to $29.5 million, and net of tenant improvement allowances were $25.5 million.

In line with its Q2 results, the company is raising its fiscal 2022 outlook on such key metrics as net sales, which it now forecasts as $3.46 billion to $3.48 billion, from $3.39 billion to $3.42 billion; comps, which it now believes will increase 8.0% to 8.5%, from 5.5% to 6.5%; adjusted EBITDA, which it predicts will be $218 million to $223 million, from $213 million to $220 million; and adjusted earnings per share – diluted, which are now 97 cents to $1, from 94 cents to 97 cents.

“We delivered strong second-quarter results, exceeding both our top- and bottom-line expectations, which is a testament to our value-oriented model and our hard-working team,” said Grocery Outlet CFO Charles Bracher. “Our increased full-year outlook reflects solid first-half performance, ongoing momentum in the current quarter and continued reinvestments in our business in support of our long-term objectives.”

Emeryville, Calif.-based Grocery Outlet offers products sold through a network of independently operated stores at more than 400 stores 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.