Discount grocery store chain Grocery Outlet (NASDAQ: GO) fell short of the market’s revenue expectations in Q4 CY2025, but sales rose 10.7% year on year to $1.22 billion. The company’s full-year revenue guidance of $4.66 billion at the midpoint came in 5.4% below analysts’ estimates. Its non-GAAP profit of $0.19 per share was 8.9% below analysts’ consensus estimates.
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Grocery Outlet (GO) Q4 CY2025 Highlights:
- Revenue: $1.22 billion vs analyst estimates of $1.22 billion (10.7% year-on-year growth, 0.6% miss)
- Adjusted EPS: $0.19 vs analyst expectations of $0.21 (8.9% miss)
- Adjusted EBITDA: $67.99 million vs analyst estimates of $72.05 million (5.6% margin, 5.6% miss)
- Adjusted EPS guidance for the upcoming financial year 2026 is $0.50 at the midpoint, missing analyst estimates by 38.6%
- EBITDA guidance for the upcoming financial year 2026 is $227.5 million at the midpoint, below analyst estimates of $274 million
- Operating Margin: -19.3%, down from 1% in the same quarter last year
- Free Cash Flow was $32.47 million, up from -$19.61 million in the same quarter last year
- Locations: 570 at quarter end, up from 533 in the same quarter last year
- Same-Store Sales were flat year on year (2.9% in the same quarter last year)
- Market Capitalization: $870.5 million
“We made progress on our strategic priorities in 2025; however, our fourth-quarter results made clear that we have more work to do, and we’re moving quickly,” said Jason Potter, President and CEO of Grocery Outlet.
Company Overview
Due to its differentiated procurement and buying approach, Grocery Outlet (NASDAQ: GO) is a discount grocery store chain that offers substantial discounts on name-brand products.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $4.69 billion in revenue over the past 12 months, Grocery Outlet is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, Grocery Outlet’s sales grew at a mediocre 9.4% compounded annual growth rate over the last three years as it barely increased sales at existing, established locations.
This quarter, Grocery Outlet’s revenue grew by 10.7% year on year to $1.22 billion but fell short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 5.3% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is commendable and indicates the market is forecasting success for its products.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
Grocery Outlet operated 570 locations in the latest quarter. It has opened new stores at a rapid clip over the last two years, averaging 10.9% annual growth, much faster than the broader consumer retail sector. This gives it a chance to scale into a mid-sized business over time.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Grocery Outlet’s demand within its existing locations has been relatively stable over the last two years but was below most retailers. On average, the company’s same-store sales have grown by 1.6% per year. This performance suggests it should consider improving its foot traffic and efficiency before expanding its store base.
In the latest quarter, Grocery Outlet’s year on year same-store sales were flat. This was a meaningful deceleration from its historical levels. We’ll be watching closely to see if Grocery Outlet can reaccelerate growth.
Key Takeaways from Grocery Outlet’s Q4 Results
We struggled to find many positives in these results. Its full-year revenue guidance missed and its full-year EBITDA guidance fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 20.5% to $7.01 immediately following the results.
The latest quarter from Grocery Outlet’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
