Grocery Outlet’s first quarter of 2026 was marked by improving store traffic, strengthened promotional efforts, and a sharper focus on restoring its value proposition. Management highlighted that positive transaction trends were driven by an increased mix of branded opportunistic products, targeted event promotions, and ongoing store refresh initiatives. CEO Jason Potter noted that weekly traffic growth accelerated throughout the quarter, with March seeing a notable uptick. While same-store sales declined, Potter emphasized, “the traction we see reinforces our conviction that we are taking the right actions,” pointing to early signs of stabilization as the company works to translate traffic gains into improved basket size.
Is now the time to buy GO? Find out in our full research report (it’s free for active Edge members).
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
- 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: $803.3 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Grocery Outlet’s Q1 Earnings Call
- Edward Kelly (Wells Fargo) asked about the sustainability of margin guidance amid macro pressures. CFO Chris Miller explained that gross margins should improve as promotional spend decreases and opportunistic product mix increases, with fuel costs having a modest impact so far.
- Mark Carden (UBS) questioned the slower pace of store refreshes. CEO Jason Potter clarified that customer feedback remains positive but resources are being reallocated to prioritize execution on core value initiatives, with a target of 100 refreshes for the year.
- Zach (Morgan Stanley, for Simeon Gutman) inquired why improved opportunistic mix did not translate into higher basket size. Potter responded that while traffic gains are visible, basket growth is expected to follow as the product mix continues to improve.
- Jeremy Hamblin (Craig-Hallum) sought clarity on the long-term target for opportunistic mix. Potter indicated a goal of approaching a 50-50 blend between opportunistic and made-to-order products, citing a clear relationship between higher opportunistic mix and better sales.
- Leah Jordan (Goldman Sachs) asked about managing inflationary pressures and value messaging. Potter stated that Grocery Outlet maintains a significant price gap versus mainstream and conventional retailers and is actively fine-tuning its marketing and communication strategies to reinforce value perception.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace at which the opportunistic product mix expands and begins to drive basket growth, (2) the company’s ability to taper promotional spending while maintaining traffic gains, and (3) the impact of operational tools and benchmarking on independent operator performance. Progress in store refreshes and the outcome of strategic alternatives for the UGO business will also be key signposts.
Grocery Outlet currently trades at $8.21, up from $7.74 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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