Grocery Outlet Holding Corp. Q4 FY2025 earnings call

Jason Potter discussed the fourth quarter results being unacceptable and the business having more work than expected. He walked through the sequence of events over the last six months, including initial cautious optimism, then comp performance deterioration due to marketing decisions, EBT distributions impact, and affordability pressure. The key drivers of comp deceleration were environmental shift, eroded value perception, and supply chain issues. Actions being taken include restoring op mix by adding DC capacity, improving forecasting, unifying merchandising and purchasing functions, using promotions as a bridge with $20M incremental investment, expanding store refresh program with 150-store target, making stores easier to run with improved tools and support, closing 36 underperforming stores, and conducting strategic review of UGO. Chris Miller walked through financials: Q4 net sales increased 10.7% to $1.22B, gross profit up 11.5% to $361M with 29.7% margin, SG&A grew 13.6%, net loss $218.2M, adjusted net income $18.7M, adjusted EBITDA $68M. Store closures expected to improve adjusted EBITDA by $12M.

For 2026, comp store sales growth expected between -2% to flat. First quarter comps between -2.5% to -1.5%. Total net sales expected $4.6 - $4.72B. Gross margins 29.7% - 30%. Adjusted EBITDA $220 - $235M. First quarter adjusted EBITDA $39 - $43M. Full-year adjusted EPS $0.45 - $0.55, first quarter $0.01 - $0.04.

Q: Jeremy Hamlin asked about same-store sales trends and improvement in February.

A: Chris said comps softened in Q3, government shutdown impacted SNAP/EBT, continued deceleration into December, highly promotional, bottomed out in January, saw 100 basis point improvement in February with more expected in March.

Q: Kylie Kohu asked about SNAP benefits.

A: November had double-digit decrease in EBT sales due to SNAP benefit interruption, recovered in December but not to expected level, February recovered.

Q: Oliver Chen asked about fixing time, new leadership, and value perception.

A: Jason said restoring op mix is 3-6 months, unified buying team, added resources, new leadership competent.

Q: Simeon Gutman asked about promotional investments.

A: Quantum of about 20M, using fresh product as bridge, not permanent, marketing mix calibrated.

Q: John Heinbockel asked about connection between everyday and opportunistic, and UGO review.

A: Jason said everyday is minimum standard, majority product is opportunistic, conducting strategic review of UGO.

Q: Edward Kelly asked about margin structure and store growth.

A: Confident in expanding margins, store closures for sustainable growth, underwriting stores with better potential.

Q: Joe Feldman asked about opening stores before format right.

A: Stores weighted to core markets, confident in approach.

Q: Mark Cardin asked about IOs and growth in East.

A: Focused on supporting IOs, growth in East with measured pace.

Q: Robbie Ohms asked about IOs and promotions.

A: Systems work ongoing, some promotion sharing, operators focused on opportunistic product