Discount grocery store chain Grocery Outlet (NASDAQ: GO) reported revenue ahead of Wall Street’s expectations in Q1 CY2026, with sales up 3.6% year on year to $1.17 billion. The company expects the full year’s revenue to be around $4.66 billion, close to analysts’ estimates. Its non-GAAP profit of $0.05 per share was $0.03 above analysts’ consensus estimates.
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Grocery Outlet (GO) Q1 CY2026 Highlights:
- Revenue: $1.17 billion vs analyst estimates of $1.15 billion (3.6% year-on-year growth, 1.4% beat)
- Adjusted EPS: $0.05 vs analyst estimates of $0.02 ($0.03 beat)
- Adjusted EBITDA: $43.12 million vs analyst estimates of $42.16 million (3.7% margin, 2.3% beat)
- The company reconfirmed its revenue guidance for the full year of $4.66 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $0.50 at the midpoint
- EBITDA guidance for the full year is $227.5 million at the midpoint, in line with analyst expectations
- Operating Margin: -15.3%, down from -2% in the same quarter last year
- Free Cash Flow was -$193,000 compared to -$1.51 million in the same quarter last year
- Locations: 549 at quarter end, up from 543 in the same quarter last year
- Same-Store Sales fell 1% year on year (0.3% in the same quarter last year)
- Market Capitalization: $787.4 million
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
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $4.73 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 grew its sales at a mediocre 8.4% compounded annual growth rate over the last three years.
This quarter, Grocery Outlet reported modest year-on-year revenue growth of 3.6% but beat Wall Street’s estimates by 1.4%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and implies its products will face some demand challenges.
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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 549 locations in the latest quarter. It has opened new stores at a rapid clip over the last two years, averaging 10.2% 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
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. 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 barely increased over the last two years as its same-store sales were flat. Grocery Outlet should consider improving its foot traffic and efficiency before expanding its store base.
In the latest quarter, Grocery Outlet’s same-store sales fell by 1% year on year. This decline was a reversal from its historical levels.
Key Takeaways from Grocery Outlet’s Q1 Results
It was good to see Grocery Outlet beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 10.8% to $8.73 immediately after reporting.
Grocery Outlet may have had a good quarter, but does that mean you should invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
