Grocery Outlet Holding Corp.

How Grocery Outlet makes money

Grocery Outlet sells discounted food and household products mostly through stores run by independent operators. Its buying model includes opportunistic purchases of excess and other discounted inventory. It ended the third quarter with 561 stores in 16 states.

Latest quarterly record

Adjusted earnings exclude restructuring, stock compensation, impairments and selected other costs, with relevant tax adjustments. Adjusted EBITDA also removes interest, taxes, depreciation and amortization. In Q3, a net restructuring credit helped reported profit; that credit is removed from adjusted results.

Store closures and remaining obligations

All 36 stores included in the restructuring plan closed in March and April 2026. At the August update, estimated net restructuring charges were $15 million to $24 million, with substantial completion expected in Q1 fiscal 2027.

The November estimate increased to $22 million to $29 million, with completion now expected in Q4 fiscal 2027. Expected cash lease-exit costs are $57 million to $64 million, offset by approximately $54 million in noncash lease-accounting credits. Lease termination, subleasing and assignment work continues.

Annual forecast changes

For fiscal 2026, ending January 2, 2027, sales guidance remains $4.70 billion to $4.72 billion. The comparable-sales range rose to growth of 0.2% to 0.4% from a decline of 0.5% to no growth. Adjusted EBITDA narrowed to $225 million to $229 million from $225 million to $235 million.

Adjusted earnings per share are forecast at $0.52 to $0.55, against the prior $0.51 to $0.55 range. Net capital spending guidance remains $170 million. Fiscal 2026 has 52 weeks, compared with 53 in fiscal 2025; both latest Q3 periods had 13 weeks.

Cash and borrowing

Quarterly operating cash flow was $18.2 million, against $17.3 million a year earlier. Capital spending after landlord allowances was $25.7 million, down from $39.4 million.

At October 3, cash was $59.8 million. Gross borrowing totaled $502.5 million, comprising a $262.5 million term loan and $240 million drawn on a revolving credit line. Remaining revolving-credit availability was $153.8 million.

Our analysis of the store-closure bill and profit recovery explains the difference between cash obligations, net charges and adjusted earnings.