Grocery Outlet to Post Q1 Earnings: What Investors Need to Know

Core Viewpoint - Grocery Outlet Holding Corp. is set to announce its first-quarter fiscal 2025 earnings results, with investors keenly observing its performance amidst challenges and growth opportunities in the competitive grocery sector [1] Revenue and Earnings Estimates - The Zacks Consensus Estimate for revenues is $1,128 million, indicating an 8.8% year-over-year improvement [2] - The earnings per share estimate is stable at 7 cents, reflecting a year-over-year decline of 22.2% [2] Earnings Performance and Factors - Grocery Outlet has a trailing four-quarter negative earnings surprise of 8.3% on average, with the last quarter's bottom line underperforming the Zacks Consensus Estimate by 11.8% [3] - Key factors supporting top-line growth include opportunistic purchasing, targeted marketing, and a disciplined store expansion strategy [3] - The expanded product assortment, featuring a mix of branded and private-label items, resonates with value-seeking consumers, enhancing customer engagement and shopping frequency [3] Strategic Collaborations and Technology - Collaborations with Instacart, DoorDash, and Uber Technologies aim to enhance accessibility and convenience through same-day delivery partnerships [4] - The mobile app has gained traction, allowing customers to access personalized deals and early promotions [4] Store Expansion and Operational Efficiency - The company's measured approach to store expansion and investments in supply-chain efficiency are expected to positively impact first-quarter performance [5] - Focusing growth on high-return markets and clustering locations aims to improve operational efficiency and capital productivity [5] Financial Challenges - Although Grocery Outlet has largely overcome the financial impacts of its system transition, lingering challenges may hinder margin expansion and operational scalability [6] - SG&A expenses are expected to rise by 12% in the first quarter, leading to a 110-basis point deleverage to 30.4% of net sales [6] Earnings Prediction - The Zacks Model predicts an earnings beat for Grocery Outlet, supported by a positive Earnings ESP and a Zacks Rank of 3 (Hold) [7][8]