Grocery Outlet Swings to Loss Amid Restructuring, Sales Up 6.1%

TL;DR

**GO's restructuring charges are eating into profits, making their sales growth look weak; stay cautious.**

AI Summary

Grocery Outlet Holding Corp. (GO) reported a mixed financial performance for the 39 weeks ended September 27, 2025. Net sales increased by 6.1% to $3.47 billion from $3.27 billion in the prior year period, indicating continued top-line growth. However, the company experienced a net loss of $6.75 million, a significant decline from a net income of $37.15 million in the same period of 2024. This loss was primarily driven by substantial restructuring charges of $46.33 million and an impairment of long-lived assets totaling $11.51 million. Operating income plummeted to $13.09 million from $66.95 million year-over-year. Cash and cash equivalents decreased to $52.13 million from $62.83 million at the end of fiscal 2024. The company's total assets grew to $3.37 billion from $3.17 billion, largely due to increases in property and equipment and operating lease right-of-use assets, reflecting ongoing store expansion and capital investments. Long-term debt, net, also increased to $481.55 million from $462.50 million.

Why It Matters

Grocery Outlet's shift to a net loss, despite revenue growth, signals significant operational challenges and strategic shifts that could impact investor confidence. The substantial restructuring charges and asset impairments suggest a re-evaluation of their business model or store portfolio, potentially affecting employee morale and future store openings. For customers, these changes could lead to store closures or altered product offerings, while competitors might capitalize on any perceived instability. The increased debt and reduced cash position also raise questions about the company's financial flexibility and ability to fund future growth initiatives in a highly competitive grocery market.

Risk Assessment

Risk Level: high — The company reported a net loss of $6.75 million for the 39 weeks ended September 27, 2025, a sharp decline from a net income of $37.15 million in the prior year. This is primarily due to $46.33 million in restructuring charges and $11.51 million in impairment of long-lived assets, indicating significant operational headwinds and potential asset write-downs.

Analyst Insight

Investors should closely monitor the impact and duration of the Restructuring Plan and its effect on future profitability. Consider holding off on new investments until there's clearer evidence of stabilization and a return to net income, as the current net loss and increased debt signal elevated risk.

Financial Highlights

revenue

$3.47B

operating Margin

0.38%

total Assets

$3.37B

total Debt

$499.30M

net Income

($6.75M)

gross Margin

30.47%

cash Position

$52.13M

revenue Growth

+6.1%

Key Numbers

• $3.47B — Net Sales (Increased by 6.1% for the 39 weeks ended September 27, 2025, compared to $3.27 billion in the prior year.)
• ($6.75M) — Net Loss (Reported for the 39 weeks ended September 27, 2025, a significant decline from $37.15 million net income in the prior year.)
• $46.33M — Restructuring Charges (Incurred for the 39 weeks ended September 27, 2025, contributing to the net loss.)
• $11.51M — Impairment of Long-Lived Assets (Recognized for the 39 weeks ended September 27, 2025, impacting profitability.)
• $13.09M — Operating Income (Decreased significantly from $66.95 million in the prior year for the 39 weeks ended September 27, 2025.)
• $52.13M — Cash and Cash Equivalents (Decreased from $62.83 million at December 28, 2024, indicating reduced liquidity.)
• $481.55M — Long-Term Debt, Net (Increased from $462.50 million at December 28, 2024, raising leverage.)
• 98,137,230 — Shares Outstanding (As of October 30, 2025, reflecting a slight increase from 97,262,557 at December 28, 2024.)

Key Players & Entities

• Grocery Outlet Holding Corp. (company) — registrant
• SEC (regulator) — filing oversight
• $3.47 billion (dollar_amount) — net sales for 39 weeks ended Sept 27, 2025
• $6.75 million (dollar_amount) — net loss for 39 weeks ended Sept 27, 2025
• $46.33 million (dollar_amount) — restructuring charges for 39 weeks ended Sept 27, 2025
• $11.51 million (dollar_amount) — impairment of long-lived assets for 39 weeks ended Sept 27, 2025
• $52.13 million (dollar_amount) — cash and cash equivalents as of Sept 27, 2025
• $481.55 million (dollar_amount) — long-term debt, net, as of Sept 27, 2025
• Emeryville, California (location) — company headquarters
• Nasdaq Global Select Market (market) — exchange where common stock is registered

FAQ

Risk Factors

• Supply Chain Disruptions [medium — operational]: The company relies on a network of suppliers and distributors. Disruptions due to natural disasters, geopolitical events, or labor disputes could impact inventory availability and increase costs, potentially affecting sales and profitability. For the 39 weeks ended September 27, 2025, cost of sales increased by 6.05% to $2.415 billion.
• Intense Competition [high — market]: The grocery retail industry is highly competitive, with players ranging from large national chains to smaller independent stores and discount retailers. Increased competition could lead to price wars and reduced market share. The company's net sales grew by 6.1% to $3.47 billion for the 39 weeks ended September 27, 2025, but operating income declined significantly.
• Leverage and Debt Obligations [medium — financial]: The company's long-term debt, net, increased to $481.55 million as of September 27, 2025, from $462.50 million at the end of fiscal 2024. High debt levels increase financial risk, particularly if the company's ability to service its debt is impacted by declining revenues or profitability.
• Store Expansion and Integration [medium — operational]: The company is pursuing store expansion, which involves significant capital investment and operational execution. Delays in opening new stores, higher-than-expected costs, or difficulties in integrating new locations into the existing operational framework could negatively impact financial performance.
• Food Safety and Compliance [medium — regulatory]: As a food retailer, Grocery Outlet is subject to stringent food safety regulations. Any failure to comply with these regulations or any foodborne illness incidents could result in significant fines, reputational damage, and loss of customer trust.
• Restructuring and Impairment Charges [high — financial]: The company incurred substantial restructuring charges of $46.33 million and an impairment of long-lived assets totaling $11.51 million for the 39 weeks ended September 27, 2025. These one-time charges significantly impacted profitability, leading to a net loss of $6.75 million.

Industry Context

The grocery retail sector is characterized by intense competition, thin profit margins, and evolving consumer preferences towards value and convenience. Discount grocers like Grocery Outlet leverage a unique sourcing model to offer lower prices, differentiating themselves from traditional supermarkets and hypermarkets. Trends include a growing demand for private label brands and an increasing focus on supply chain efficiency.

Regulatory Implications

Grocery Outlet operates under strict food safety and labeling regulations. Compliance with these standards is critical to avoid penalties, product recalls, and reputational damage. Changes in labor laws or environmental regulations could also impact operational costs and strategies.

What Investors Should Do

1. [object Object]
2. [object Object]
3. [object Object]
4. [object Object]

Key Dates

• 2025-09-27: End of 39-week period — Reporting period for the current 10-Q, showing net sales of $3.47 billion and a net loss of $6.75 million.
• 2024-09-28: End of prior year 39-week period — Comparison period for the current 10-Q, showing net sales of $3.27 billion and net income of $37.15 million.
• 2025-10-30: Shares outstanding reported — As of this date, there were 98,137,230 shares outstanding, a slight increase from the previous reporting period.
• 2024-12-28: End of Fiscal Year 2024 — Balance sheet comparison point, showing cash and cash equivalents of $62.83 million and net long-term debt of $462.50 million.

Glossary

Restructuring Charges

Costs associated with significant reorganizations or shutdowns of business operations, such as severance pay or facility closure costs. (These charges of $46.33 million significantly contributed to the net loss for the period.)

Impairment of Long-Lived Assets

A reduction in the carrying value of an asset when its fair value is less than its book value, indicating a permanent decline in its economic usefulness. (An $11.51 million impairment charge negatively impacted the company's profitability.)

Operating Lease Right-of-Use Assets

Assets recognized by lessees under accounting standards for leases, representing the right to use an underlying asset for the lease term. (These assets increased to $1.12 billion, reflecting ongoing store expansion and lease commitments.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its identifiable net assets. (Goodwill remains a significant intangible asset on the balance sheet at $782.8 million.)

Operating Income

A measure of a company's profit after deducting operating expenses from total revenue, excluding interest and taxes. (Plummeted to $13.09 million from $66.95 million year-over-year, indicating a significant decline in core business profitability.)

Cash and Cash Equivalents

Highly liquid short-term investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. (Decreased to $52.13 million, suggesting a tightening liquidity position.)

Year-Over-Year Comparison

Compared to the prior year period, Grocery Outlet Holding Corp. saw a 6.1% increase in net sales, reaching $3.47 billion. However, profitability deteriorated significantly, with operating income dropping from $66.95 million to $13.09 million and the company reporting a net loss of $6.75 million, a stark contrast to the $37.15 million net income in the prior year. This shift was heavily influenced by substantial restructuring charges and asset impairments totaling $57.84 million.

Key Financial Figures

• $0.001 — ich registered Common Stock, par value $0.001 per share GO Nasdaq Global Select Marke

Filing Documents

• go-20250927.htm (10-Q) — 1342KB
• go2025q310-qexhibit311.htm (EX-31.1) — 11KB
• go2025q310-qexhibit312.htm (EX-31.2) — 11KB
• go2025q310-qexhibit321.htm (EX-32.1) — 6KB
• go2025q310-qexhibit322.htm (EX-32.2) — 6KB
• go-20250927_g1.jpg (GRAPHIC) — 17KB
• 0001771515-25-000169.txt ( ) — 7201KB
• go-20250927.xsd (EX-101.SCH) — 46KB
• go-20250927_cal.xml (EX-101.CAL) — 96KB
• go-20250927_def.xml (EX-101.DEF) — 216KB
• go-20250927_lab.xml (EX-101.LAB) — 630KB
• go-20250927_pre.xml (EX-101.PRE) — 435KB
• go-20250927_htm.xml (XML) — 1026KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1 .

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 4 Condensed Consolidated Statements of Stockholders' Equity 5 Condensed Consolidated Statements of Cash Flows 7 Notes to Condensed Consolidated Financial Statements 8 Item 2 .

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Overview 25 Results of Operations 29 Liquidity and Capital Resources 37 Critical Accounting Policies and Estimates 39 Recent Accounting Pronouncements 39 Item 3 . Quantitative and Qualitative Disclosure about Market Risk 40 Item 4 .

Controls and Procedures

Controls and Procedures 41

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1 .

Legal Proceedings

Legal Proceedings 42 Item 1A .

Risk Factors

Risk Factors 42 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 42 Item 3 . Defaults Upon Senior Securities 42

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 42 Item 5 . Other Information 42 Item 6 . Exhibits 43

Signatures

Signatures 44 1 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in this Quarterly Report on Form 10-Q ("Form 10-Q" or "report") constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this report other than statements of historical fact may constitute forward-looking statements, including statements regarding our future operating results and financial position, our business strategy and plans, the opening of new stores and new store growth, costs and benefits associated with the Restructuring Plan as defined in this Form 10-Q, our enterprise resource planning system project and impacts, the remediation plan of our material weakness, business and market trends, macroeconomic and geopolitical conditions, our private label program, our share of the excess inventory market, and the sufficiency of our cash balances, working capital and cash generated from operating, investing, and financing activities for our future liquidity and capital resource needs. Words such as "anticipate," "believe," "estimate," "expect," "intend," "may," "outlook," "plan," "project," "seek," "will," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied by any forward-looking statements we make, including those described under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this report and our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 ("2024 Form 10-K"), and as described in other subsequent reports we file with the United States ("U.S.") Securities and Exchange Commission (the "SEC"). We encourage you to read this report and our other

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. GROCERY OUTLET HOLDING CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) (unaudited) September 27, 2025 December 28, 2024 Assets Current assets: Cash and cash equivalents $ 52,125 $ 62,828 Independent operator receivables and current portion of independent operator notes, net of allowance $ 11,551 and $ 5,770 15,511 16,051 Other accounts receivable, net of allowance $ 9 and $ 9 3,641 4,166 Merchandise inventories 417,846 394,152 Prepaid expenses and other current assets 28,335 26,701 Total current assets 517,458 503,898 Independent operator notes and receivables, net of allowance $ 14,015 and $ 12,709 41,207 36,441 Property and equipment, net 818,130 750,423 Operating lease right-of-use assets 1,123,785 1,014,678 Intangible assets, net 80,098 78,778 Goodwill 782,835 782,734 Other assets 5,125 6,869 Total assets $ 3,368,638 $ 3,173,821 Liabilities and Stockholders' Equity Current liabilities: Trade accounts payable $ 196,723 $ 175,871 Accrued and other current liabilities 62,452 55,240 Accrued compensation 27,453 19,687 Current portion of long-term debt 18,750 15,000 Current lease liabilities 80,468 72,905 Income and other taxes payable 12,848 10,921 Total current liabilities 398,694 349,624 Long-term debt, net 481,549 462,502 Deferred income tax liabilities, net 56,595 56,178 Long-term lease liabilities 1,230,632 1,106,219 Other long-term liabilities 2,561 1,914 Total liabilities 2,170,031 1,976,437 Commitments and contingencies (Note 8) Stockholders' equity: Common stock, par value $ 0.001 per share, 500,000,000 shares authorized; 98,137,230 and 97,262,557 shares issued and outstanding, respectively 98 97 Series A preferred stock, par value $ 0.001 per share, 50,000,000 shares authorized; no shares issued and outstanding — — Additional paid-in capital 823,831 815,858 Retained earnings 374,678 381,429 Total stockholders' equity 1,198,607 1,197