Grocery Outlet reported Q4 adjusted EPS of $0.19 versus consensus $0.21 and net sales of $1.2153 billion against estimates of $1.235 billion, representing a 10.7% year-over-year sales increase. Gross profit rose 11.5% to $361 million with gross margin expanding 20 basis points to 29.7%, while SG&A expenses climbed 13.6% to $337.1 million, driving shares down 23.2%.

Comparable-store sales declined 0.8% as average transaction size fell 1.7%, partly offset by a 0.9% rise in transactions, reflecting smaller customer baskets due to affordability concerns and delayed SNAP benefit disbursements. The downturn in opportunistic discounted products weakened the company’s treasure-hunt retail value proposition.

The board approved an Optimization Plan to close 36 financially underperforming stores in 2026, terminate or sublease related leases, and adjust operator agreements. Management also plans to increase promotional activity and rebuild its opportunistic product pipeline to strengthen customer value perception.

For Q1, Grocery Outlet forecasts comparable sales down 2.5% to 1.5%, gross margin of 29.6% to 29.8% (30% to 30.2% excluding inventory liquidation), adjusted EBITDA of $39 million to $43 million, and EPS of $0.01 to $0.04. Full-year 2026 net sales are projected at $4.60 billion to $4.72 billion with adjusted EBITDA of $220 million to $235 million and EPS of $0.45 to $0.55, noting store closures will trim revenue growth by 2%.