Grocery Outlet Holding Corp. (NASDAQ: GO) reported a net loss of $224.9 million for fiscal 2025, a dramatic swing from the $39.5 million net profit posted the prior year, as the retailer absorbed $149 million in goodwill impairment charges, $113.8 million in non-cash asset impairment, and $45.9 million in restructuring costs.
Despite those headline losses, the company’s adjusted results told a more stable story. Adjusted EBITDA increased 7.4 percent to $254.3 million, representing 5.4 percent of net sales, and full-year net sales rose 7.3 percent to $4.69 billion.
Q4 Performance Strained by Macro Headwinds
The fourth quarter was particularly difficult. Comparable store sales declined 0.8 percent on a 13-week basis, driven by a 1.7 percent drop in average transaction size, partially offset by a 0.9 percent increase in transaction count.
Management pointed directly to government benefit delays as a contributing factor. The decline in comparable store sales was adversely impacted by the delayed disbursement of benefits from federally-funded assistance programs that many of Grocery Outlet’s customers depend on, including the Supplemental Nutrition Assistance Program (SNAP).
President and CEO Jason Potter acknowledged the quarter fell short while signaling a path forward. “Consumer pressure intensified, federally funded benefits were delayed, and competition grew more promotional in the fourth quarter,” Potter said.
“In response, we have begun to sharpen our focus on what matters most: delivering clearer value and a better in-store experience. We’re intensely focused on restoring the opportunistic mix to rebuild value perception with the customer and advancing our store refresh program, and we’re already seeing early, measurable improvements.”
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Optimization Plan: 36 Store Closures
On March 2, Grocery Outlet’s Board adopted what it’s calling an Optimization Plan. The plan provides for the closure of 36 financially underperforming stores, including the termination or sublease of applicable store leases and the termination of operator agreements with independent operators for those locations. These actions are expected to be substantially completed during fiscal 2026.
The company estimates it will incur between $14 million and $25 million in net total restructuring charges in fiscal 2026 related to the Optimization Plan, including between $51 million and $63 million in estimated cash expenditures primarily for lease termination fees.
Potter framed the closures as a necessary correction. “We’re closing underperforming stores, reshaping our new store growth strategy and reallocating resources to strengthen operating results and returns on capital,” he said. “We are confident that we have identified the core challenges, and now have the right plans in place and the right team to execute them.”
Store Count and Capital Spending
Grocery Outlet opened 42 new stores and closed 5 during fiscal 2025, ending the year with 570 locations across 16 states. Capital expenditures net of tenant improvement allowances were $191.9 million for the year.
On the positive side, net cash provided by operating activities during fiscal 2025 was $222.1 million, compared with $112.0 million for fiscal 2024, with the increase driven primarily by improved inventory management and the timing of payments.
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Fiscal 2026 Outlook
The company’s guidance for fiscal 2026 reflects the impact of the store closures and a 52-week calendar versus the prior year’s 53 weeks — meaning results will have one fewer week of sales to draw from when compared year-over-year.
Grocery Outlet is projecting net sales of $4.60 to $4.72 billion and comparable store sales of -2.0 percent to 0.0 percent — meaning the stores that were open in both years could see flat to slightly lower sales than last year.
Adjusted EBITDA is projected at $220 million to $235 million, with diluted adjusted earnings per share of $0.45 to $0.55. Net new store openings, excluding Optimization Plan closures, are expected to total 30 to 33. Grocery Outlet is still growing — just more selectively, prioritizing stores likely to perform rather than chasing a raw unit count.