Grocery Outlet remains bullish on unit growth

Grocery Outlet’s third quarter net sales topped $1 billion on Wednesday and the California-based retailer remains bullish on having its future store count in the thousands.

“Our white space remains huge with the potential to operate over 4,000 stores across the U.S.,” said Grocery Outlet CEO RJ Sheedy, during a third-quarter earnings call with analysts on Tuesday.

The discount grocer’s efforts in gaining market share continued during the third quarter with the opening of eight new stores, ending the period with 455 locations.

“Complementary growth opportunities include expanding strategic relationships with large property owners, evaluating opportunistic real estate lists and exploring strategic regional acquisitions,” Sheedy said, according to a transcript from financial services site Sentieo.

With 13 new stores slated to open in the fourth quarter, Grocery Outlet relies on a unique model where stores are independently operated by local families who are committed to supporting their communities.  

Sheedy told analysts that Grocery Outlet is “actively working the pipeline right now for 2025 and 2026.”

Grocery Outlet’s earnings for the third quarter did hit a snag, which impacted the grocer's same-store sales and margins.

In August, Grocery Outlet upgraded its tech systems, an overhaul that included enhanced data analytics capabilities.

Despite the improved enhancements of the upgraded systems, the transition to these new systems “has resulted in ordering and inventory disruptions that have impacted third and fourth quarter results,” Sheedy said.

The third-quarter upgrades led to operational disruptions that are estimated to have muted same-store sales by about 150 basis points and gross margin by 50 basis points, the grocer said.

Next week, the extreme-value grocery retailer will open its first Ohio location. The new store, which will be in Boardman, is a “huge milestone for us,” Sheedy said in a statement. “After the success we’ve had in the Mid-Atlantic, we’re eager to expand to the Midwest and make high-quality, affordable groceries more accessible to the community.”