Sponsored By

Grocery Outlet projects 25% first-quarter sales jump

Fewer shopper store visits ‘more than offset’ by bigger basket size

Russell Redman

April 21, 2020

3 Min Read
Grocery_Outlet_store-Fresno_CA.jpg
During the first quarter, Grocery Outlet opened 10 new stores and closed two stores, giving the retailer 355 locations in California, Washington, Oregon, Pennsylvania, Idaho and Nevada.Grocery Outlet

Citing coronavirus-triggered demand, Grocery Outlet Holding Corp. expects sales to jump more than 25% and earnings to more than double for its fiscal 2020 first quarter.

In preliminary results released late yesterday, Grocery Outlet said net sales for the quarter ended March 30 rose 25.4% to $760.3 million from $606.3 million a year earlier. The gain reflects surging same-store sales and added business from 32 net new stores opened over the last 12 months, according to the Emeryville, Calif.-based extreme value grocer.

Comparable-store sales growth soared 17.4% year over year, fueled by rising customer transactions and a bigger average transaction size.

Grocery Outlet projects first-quarter net income of $8.8 million to $9.9 million, compared with $3.8 million in the prior-year period. From the midpoint of that range, that would mark an increase of $5.6 million, or 147.7%, the company said.

On an adjusted basis, net earnings are forecast at $30.3 million to $31.4 million, up from $9.9 million a year ago, representing a gain of $20.9 million, or 209.6%, from the midpoint.

“While April sales trends have moderated compared to the wave of customer pantry-loading experienced in March, comparable-store sales trends for the first three fiscal weeks of April were in the positive high-single digits in percentage terms,” Grocery Outlet stated. “As shelter-in-place requirements continued, we have experienced reduced store traffic and, as a result, year-over-year declines in the number of customer transactions on a comparable-store basis. However, the reduction in shopper visits have been more than offset to date by an increase in average transaction size.”

Related:Grocery Outlet sees strong finish to fiscal year

Grocery Outlet said certain high-velocity items, such as toilet paper, remain tough to procure in ample quantities, but the company continues to purchase high volumes of “both opportunistic and everyday products,” enabling it to manage overall inventory positions to meet elevated customer demand. 

“Looking forward, we expect consumer demand and shopping behavior to continue to evolve, which may impact future sales trends,” the retailer said. “In addition, our results may be impacted by existing or possible future governmental requirements concerning the operations of our stores or distribution facilities.”

Grocery Outlet reported that it expects to incur “significant additional expenses” due to the COVID-19 outbreak, including added costs for cleaning and safety, corporate and distribution center staff, protective equipment and supplies at stores and facilities, and its supply chain.

Related:Grocery Outlet’s MacGregor Read named nonexecutive vice chairman

“Because of the timing of accelerated customer purchasing beginning in mid-March, only a portion of these costs impacted our first-quarter preliminary results,” the company said. “However, we expect that COVID-19 related expenses will more significantly burden our second-quarter financial results.”

During the first quarter, Grocery Outlet opened 10 new stores and closed two stores, giving the retailer 355 locations in California, Washington, Oregon, Pennsylvania, Idaho and Nevada, compared with 323 stores a year ago.

“Although construction activities for the majority of our new stores under development continue, we expect that the timing of new store openings will be negatively impacted as a result of shelter-in-place requirements,” the company noted.

For our most up-to-date coverage, visit the coronavirus homepage.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like