GO

The Procter & Gamble Company PG has reported first-quarter fiscal 2027 core earnings of $2.00 per share, rising 1% year over year and beating the Zacks Consensus Estimate of $1.89. Higher sales and productivity savings supported earnings, partly offset by increased operating costs. Net sales rose 4% year over year to $23.28 billion, surpassing the consensus mark of $22.71 billion. Organic sales grew 4%, driven by 2.4% volume growth, a 1.1% favorable mix contribution and a 0.4% pricing benefit. Foreign exchange had a neutral impact on sales growth. Our model predicted organic sales growth of 0.5% for the reported quarter. Procter & Gamble Company (The) price-consensus-eps-surprise-chart | Procter & Gamble Company (The) Quote Fabric & Home Care remained the largest business, with sales increasing 4% year over year to $8.21 billion. Baby, Feminine & Family Care sales rose 3% to $5.32 billion. Beauty sales advanced 6% to $4.41 billion, while Health Care revenues increased 3% to $3.32 billion. Grooming sales grew 4% to $1.89 billion. Beauty benefited from higher volumes, favorable product mix and currency gains. Fabric & Home Care benefited from a 4.3% volume increase, while favorable pricing and product mix supported Grooming. Health Care witnessed a 2.9% volume decline, partly offset by higher pricing and favorable mix. Our model expected first-quarter fiscal 2027 sales to improve 6% for Beauty, 1% each for the Grooming and Fabric & Home Care segments, and flat sales for the Health Care segment. Sales for the Baby, Feminine & Family Care segment were expected to decline 1% in the reported quarter. Procter & Gamble's shares rose 3.3% following the earnings release. The Zacks Rank #3 (Hold) company's shares have gained 9.4% year to date compared with the industry's 8.7% growth. Image Source: Zacks Investment Research Beauty and Fabric & Home Care each recorded organic sales growth of 5% year over year. Within Beauty, Hair Care advanced in the mid-single digits, driven by innovation-based pricing in North America and Latin America, favorable product mix and higher volumes. Personal Care and Skin Care also delivered mid-single-digit organic growth. Grooming organic sales increased 5%, supported by innovation-led pricing and favorable product mix. Health Care organic sales grew 3%, reflecting low-single-digit gains in Oral Care and Personal Health Care, although volume declines weighed on both businesses. Baby, Feminine & Family Care registered 3% organic sales growth. Baby Care benefited from higher volumes in Greater China and North America and favorable premium mix. Feminine Care gained from favorable mix and innovation-based pricing, while Family Care benefited from volume growth, partially offset by merchandising investments. Our model predicted organic sales growth of 4% for Beauty and 1% for Fabric & Home Care. Our model anticipated organic sales declines of 1% for Health Care and 2% for Baby, Feminine & Family Care for the fiscal first quarter. Meanwhile, we expected organic sales for the Grooming segment to be flat year over year. Reported gross margin contracted 160 basis points (bps) year over year to 49.8%. Excluding incremental restructuring charges, the core gross margin declined 150 bps to 50%. Our model projected core gross margin expansion of 20 bps to 50.3%. The core gross margin was pressured by 140 bps each due to elevated commodity costs and product reinvestments, alongside 50 bps in unfavorable mix. These impacts were partly offset by 120 bps of productivity savings, 50 bps of favorable tariff impacts and 20 bps of pricing benefits. Core selling, general and administrative expenses declined 80 bps to 24.1% of sales. Productivity savings and sales leverage contributed 130 bps and 100 bps, respectively, partially offset by reinvestments. Consequently, the core operating margin contracted 80 bps to 25.9%, incorporating gross productivity savings of 250 bps. We expected the core operating margin to increase 230 bps year over year to 24.5%. The operating cash flow totaled $5.77 billion in the first quarter of fiscal 2027 compared with $5.41 billion in the prior-year quarter. Capital expenditure amounted to $1.37 billion, resulting in a free cash flow of $4.4 billion. The free cash flow productivity reached 93%. PG returned $3.9 billion to shareholders, including $2.6 billion in dividends and $1.3 billion through share repurchases. As of Sept. 30, 2026, cash and cash equivalents totaled $15.37 billion, up from $9.94 billion at June 30, 2026. PG raised its fiscal 2027 all-in sales growth guidance to 2-4% from 1-3%, reflecting the acquisition of Thorne on Oct. 1, 2026. Management maintained its organic sales growth outlook of 1-3%, incorporating a 30-50-bps headwind from brand, product form and go-to-market discontinuations. The company reaffirmed core earnings guidance of flat to up 3%, implying $6.89-$7.11 per share. The midpoint stands at $7, indicating 1.5% growth. Reported EPS is projected to increase 1-5%. Management anticipates $1.4 billion in after-tax commodity cost headwinds, reflecting higher raw material, energy and transportation expenses. Higher net interest expenses, lower non-operating income and unfavorable currency are expected to add pressure. Combined, these factors represent a 79-cent-per-share headwind, equivalent to an 11% drag on core EPS growth. The company expects a core effective tax rate of 20-21%. PG projects free cash flow productivity of 85-90%, with capital spending estimated at 4.5-5.5% of net sales. It plans to distribute more than $10 billion in dividends and repurchase approximately $5 billion in common shares in fiscal 2027. BJ's Wholesale Club Holdings Inc. BJ is a leading membership-based warehouse club operator concentrated primarily in the eastern half of the United States. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for BJ's Wholesale's current fiscal-year sales and earnings indicates growth of 11.7% and 6.8%, respectively, from the prior-year reported level. BJ delivered a trailing four-quarter earnings surprise of 4.8%, on average. Grocery Outlet Holding Corp. GO is a high-growth, extreme value retailer of quality, name-brand consumables and fresh products that are sold through a network of independently owned and operated stores. The company currently carries a Zacks Rank #2. The Zacks Consensus Estimate for Grocery Outlet's current fiscal-year sales and earnings indicates declines of 0.3% and 27.6%, respectively, from the year-ago reported numbers. GO delivered a trailing four-quarter earnings surprise of 54.4%, on average. Purple Innovation Inc. PRPL designs, manufactures, and sells sleep and other products in the United States and internationally. The company currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for Purple Innovation's current fiscal-year sales indicates a decline of 8.5% from the prior-year level's actual, while the earnings estimate suggests growth of 36.3%. PRPL delivered a trailing four-quarter earnings surprise of 21.3%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Procter & Gamble Company (The) (PG) : Free Stock Analysis Report BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report PURPLE INNOVATION, INC. (PRPL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The market came into Grocery Outlet at ¥3,185 a share after a choppy three months and a small slide over the past week. Q1 2027 results then hit with a clear message. Revenue reached ¥12,243 million while basic earnings per share landed at ¥30.96. Traders now need to decide whether the latest price action reflects a cool-headed read of those profits or if sentiment is latching onto headline EPS and ignoring the broader profitability trend that shows up in the trailing twelve month earnings record. Like the Q1 print from Grocery Outlet but worried that trailing earnings may be masking quality issues in the profit trend? Benchmark GO against a list of solid balance sheet and fundamentals stocks (21 results) to see peers that pair current profitability with sturdier financial footing. - Revenue (Q1 2027 vs. Q1 2026): ¥12,243 million vs. ¥9,619.5 million (up about 27.1%) - Net Income (Excl. Extra Items, Q1 2027 vs. Q1 2026): ¥2,476 million vs. ¥1,971 million (up about 25.6%) - Basic EPS (Q1 2027 vs. Q1 2026): ¥30.96 per share vs. ¥25.37 per share (up about 22.0%) - Trailing 12-Month Net Income (Excl. Extra Items, Q1 2027 vs. Q1 2026): ¥9,343 million vs. ¥8,838 million (up about 5.7%) Prefer clean visuals instead of another wall of earnings tables and ratios? Get a full picture of GO with an at a glance view of its recent earnings and broader financial trends in the interactive company report for GO. For anyone leaning positive on Grocery Outlet, the immediate story is simple. Revenue and net income excluding extra items both moved higher year on year, and basic EPS grew as well. That fits a narrative where the mobility platform model is scaling rather than stalling. Trailing 12 month profit is also higher than a year ago, which supports the idea that Q1 is not a one off spike but part of a broader upward earnings path. There is also ammunition if you are cautious on GO. Trailing 12 month net income grew more slowly than the latest quarter, hinting that earnings momentum over a full year is more muted than the fresh headline EPS suggests. Recent share price returns tell a similar story. A strong 90 day gain sits beside a decline over the past week, which signals that investors are still weighing how durable this profit trend really is. Are you convinced Grocery Outlet's earnings path is genuinely improving, or do you suspect a short term bump that analysts may fade? Check the consensus price target analysis for GO. Grocery Outlet reports give updated context for how the market views its earnings story. The real opportunity is quietly assessing stocks that may be overlooked before sentiment and pricing better reflect their fundamentals. - Company 1 - 37% below our estimate - manages virtual entertainers for clients seeking digital personalities that deepen content engagement and fan interaction. - Company 2 - 19% below our estimate - assembles real asset projects that bundle solar output, logistics capacity and flexible stay properties into long-duration contracts. - Company 3 - 45% below our estimate - supplies molding equipment that supports beverage and consumer brands when scaling distinct custom plastic bottle designs. Three companies from the same screener. Open the full list of 14 companies trading below our fair value estimates → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include 581A.T. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at grocery store stocks, starting with Grocery Outlet (NASDAQ:GO). Grocery stores are non-discretionary because they sell food, an essential staple for life (maybe not that ice cream?). Selling food, however, is a notoriously tough business as grocers must deal with the costs of procuring and transporting oftentimes perishable products. Plus, the costs of operating stores to sell everything from raw meat to ice cream and fresh fruit are high. Competition is also fierce because grocers and other peers such as wholesale clubs tend to sell very similar brands and products. On the bright side, grocery is one of the least penetrated categories in e-commerce because customers prefer to buy their food in person. Still, the online threat exists and will likely increase over time rather than dwindle. The 4 grocery store stocks we track reported a mixed Q2. As a group, revenues beat analysts' consensus estimates by 0.7%. While some grocery store stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.6% since the latest earnings results. Due to its differentiated procurement and buying approach, Grocery Outlet (NASDAQ:GO) is a discount grocery store chain that offers substantial discounts on name-brand products. Grocery Outlet reported revenues of $1.19 billion, up 1.1% year on year. This print exceeded analysts' expectations by 2.1%. Overall, it was an exceptional quarter for the company with a beat of analysts' EPS estimates and an impressive beat of analysts' EBITDA estimates. Grocery Outlet pulled off the biggest analyst estimate beat among its peers. Unsurprisingly, the stock is up 12.9% since reporting and currently trades at $11.48. Is now the time to buy Grocery Outlet? Access our full analysis of the earnings results here, it's free. With a sprawling network of over 2,400 locations offering digital pickup services, Kroger (NYSE:KR) operates supermarkets, pharmacies, and fuel centers across 35 states, offering customers groceries, household items, and private-label products. Kroger reported revenues of $34.62 billion, up 2% year on year, in line with analysts' expectations. The business had a satisfactory quarter with full-year EPS guidance beating analysts' expectations but a slight miss of analysts' gross margin estimates. The market seems content with the results as the stock is up 3% since reporting. It currently trades at $58.67. Is now the time to buy Kroger? Access our full analysis of the earnings results here, it's free. With over 20 well-known grocery banners spanning 34 states, Albertsons (NYSE:ACI) operates food and drug retail stores across the US, offering groceries, pharmacy services, and own-brand products under banners like Safeway, Jewel-Osco, and Vons. Albertsons reported revenues of $24.94 billion, flat year on year, exceeding analysts' expectations by 0.6%. Still, it was a softer quarter as it posted full-year EBITDA guidance missing analysts' expectations significantly and a significant miss of analysts' EBITDA estimates. Albertsons delivered the slowest revenue growth in the group. As expected, the stock is down 17.3% since the results and currently trades at $12.08. Read our full analysis of Albertsons's results here. Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ:SFM) is a grocery store chain emphasizing natural and organic products. Sprouts reported revenues of $2.33 billion, up 4.7% year on year. This number was in line with analysts' expectations. Zooming out, it was a slower quarter as it recorded EPS guidance for next quarter missing analysts' expectations significantly and full-year EPS guidance missing analysts' expectations. Sprouts delivered the fastest revenue growth among its peers. The stock is down 13% since reporting and currently trades at $68.85. Read our full, actionable report on Sprouts here, it's free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market's biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market's primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market's dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

It has been about a month since the last earnings report for Grocery Outlet Holding Corp. (GO). Shares have added about 2.6% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Grocery Outlet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts. Grocery Outlet reported second-quarter 2026 results, with both top and bottom lines surpassing the Zacks Consensus Estimate. While net sales increased year over year, adjusted earnings per share declined from the year-ago period. Results reflected sequential improvement in comparable-store sales and customer basket trends, along with continued traction from efforts to strengthen the company’s opportunistic offering and value perception. Management also raised several key components of its fiscal 2026 outlook following second-quarter results that came in ahead of its expectations. The company improved its comparable-store sales forecast and increased the lower ends of its net sales, adjusted EBITDA and adjusted earnings-per-share guidance ranges. Grocery Outlet delivered adjusted earnings of 20 cents a share for the second quarter, beating the Zacks Consensus Estimate of 12 cents by 66.7%. The figure declined from adjusted earnings of 23 cents reported in the year-ago quarter. Net sales increased 1.1% year over year to $1,192.8 million, surpassing the consensus mark of $1,167 million by 2.2%. The improvement was driven by sales from new stores, partially offset by lower sales stemming from store closures under the Optimization Plan and a decline in comparable-store sales.Comparable-store sales declined 0.3% in the quarter, improving from the 1% drop registered in the first quarter. The second-quarter decrease reflected a 2.1% decline in average transaction size, partly offset by a 1.8% increase in the number of transactions. Management highlighted sequential improvement in the basket while traffic remained positive, signaling progress in its efforts to strengthen value perception and restore the core strengths of the business. Gross profit was relatively unchanged year over year at $360.7 million. Gross margin contracted 40 basis points to 30.2% from 30.6% in the prior-year quarter. The contraction primarily reflected product promotions aimed at driving sales and inventory markdowns and write-offs associated with Optimization Plan store closures, partly offset by improvements in inventory management.Selling, general and administrative expenses increased slightly to $339.5 million from $336.8 million in the year-ago period. As a percentage of net sales, SG&A expenses were relatively flat year over year at 28.5%.Adjusted EBITDA declined 3.1% year over year to $65.7 million from $67.7 million. Adjusted EBITDA margin of 5.5% contracted 20 basis points year over year.    The company posted operating income of $15.8 million, up from $12.8 million in the year-ago quarter. The latest quarter included $5.4 million in net restructuring charges related to the Optimization Plan. Grocery Outlet opened 10 new stores and closed 12 stores during the quarter, including nine closures related to its Optimization Plan, ending the period with 547 stores across 16 states. The company completed the closure of all 36 financially underperforming stores identified under the Optimization Plan during the first half of fiscal 2026. For fiscal 2026, Grocery Outlet continues to expect 30-33 net new store openings, excluding closures related to the Optimization Plan. Grocery Outlet ended the quarter with cash and cash equivalents of $74.2 million compared with $69.6 million at fiscal 2025-end. Long-term debt, net, totaled $490.6 million, while stockholders’ equity stood at $816.6 million. The company generated $43.2 million in operating cash flow during the second quarter compared with $73.6 million in the prior-year period. The decline primarily reflected the timing of accrued and other liabilities, lower operating lease liabilities stemming from the Optimization Plan and lower net income after adjusting for non-cash charges.Capital expenditures, net of tenant improvement allowances, were $38.7 million compared with $58.3 million in the year-ago quarter. Management continues to expect fiscal 2026 capital expenditures of about $170 million, net of tenant improvement allowances. Management raised several components of its fiscal 2026 outlook, reflecting improved operating trends and second-quarter results that came in ahead of its expectations. Grocery Outlet now expects net sales of $4.70-$4.72 billion, raising the lower end from the previous guidance of $4.60-$4.72 billion. Comparable-store sales are projected to be between flat and down 0.5%, a substantial narrowing from the previous range of flat to down 2%. The company now anticipates a gross margin of 29.8%-30% compared with the prior forecast of 29.7%-30%. Adjusted EBITDA is expected in the range of $225-$235 million versus the previous $220-$235 million projection. Grocery Outlet also raised its fiscal 2026 adjusted earnings-per-share guidance to 51-55 cents from 45-55 cents previously. In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -19.33% due to these changes. Currently, Grocery Outlet has a average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the second quintile for this investment strategy. Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Grocery Outlet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

With Ollie's Bargain Outlet Holdings, Inc. OLLI set to announce its second-quarter fiscal 2026 earnings results on Sept. 2, before the market opens, investors face a critical question: Can OLLI continue its streak of surprising results, or will challenges temper growth?The Zacks Consensus Estimate for second-quarter revenues is pegged at $757.9 million, implying an 11.5% increase from the year-ago reported figure. Meanwhile, the consensus estimate for earnings has declined by a penny over the past 30 days to $1.14 per share. Nevertheless, the estimate indicates year-over-year earnings growth of 15.2%.Ollie's Bargain has a trailing four-quarter earnings surprise of 4.9%, on average. In the last reported quarter, this Harrisburg, PA-based company surpassed the Zacks Consensus Estimate by 4.6%. Image Source: Zacks Investment Research As investors prepare for Ollie's Bargain’s second-quarter results, the question looms regarding an earnings beat or miss. Our proven model does not conclusively predict an earnings beat for Ollie's Bargain this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Ollie's Bargain has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Ollie's Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollie's Bargain Outlet Holdings, Inc. Quote Ollie’s Bargain’s second-quarter performance is likely to have benefited from the continued strength of its closeout buying model and an increasingly value-conscious environment. Management entered the quarter with a strong pipeline of merchandise deals, supported by retail industry consolidation and fewer competing buyers for large closeout opportunities. The company also indicated that both the quality and availability of deals remained favorable. This environment should have helped OLLI offer compelling branded merchandise at attractive price points.Building on that value proposition, OLLI’s store expansion and customer-engagement initiatives are also likely to have supported sales. New store growth remained a key priority, while management expressed confidence in its real estate pipeline and continued expansion strategy. At the same time, the company entered the quarter with strong momentum in its Ollie’s Army loyalty program and planned several customer-focused events, including Ollie’s Army Night and Ollie’s Days. An additional flyer event was also moved into the second quarter to capture back-to-school demand. Together, these initiatives are likely to have helped drive customer acquisition.OLLI continued to optimize its merchandise mix by allocating space toward more productive categories and reducing exposure to structurally weaker areas. Management also highlighted ongoing efforts to improve supply-chain productivity, including technology upgrades across its distribution network and capacity investments. Better closeout buying, supply-chain efficiencies and lower shrink were cited as margin-supportive factors, giving the company room to invest in price. However, the quarter was not without headwinds. Cautious discretionary spending, pressure on household budgets and elevated fuel costs may have weighed on customer traffic and shopping frequency. The second quarter also lacked the potential support from higher tax refunds. Ollie's Bargain, which competes with Grocery Outlet Holding Corp. GO and Dollar Tree, Inc. DLTR, has seen its share price decline 4.8% over the past three months against the industry’s rise of 6.1%. While shares of Grocery Outlet have rallied 41.1%, Dollar Tree has jumped 15.7% in the aforementioned period. Image Source: Zacks Investment Research Ollie’s Bargain’s valuation remains attractive relative to the industry. OLLI currently trades at a forward 12-month price-to-sales (P/S) multiple of 1.44, representing a notable discount to the industry average of 2.29. The stock is also trading well below its 12-month median P/S multiple of 2.17, suggesting a relatively inexpensive valuation compared with its recent historical levels. However, OLLI commands a premium to some of its close peers. Grocery Outlet trades at a forward 12-month P/S multiple of 0.25, while Dollar Tree carries a multiple of 1.11. Image Source: Zacks Investment Research Ollie’s Bargain enters the second-quarter earnings release with a favorable closeout environment, store expansion, loyalty-driven customer engagement, and ongoing merchandising and supply-chain improvements. However, pressure on discretionary spending and elevated fuel costs are concerns, while the current earnings setup does not provide a strong signal for a positive surprise. Although the stock’s discounted valuation offers some support, that alone may not be enough to offset the risks. Given the mixed backdrop and limited visibility into an earnings beat, prospective investors may be better off waiting for greater clarity from the upcoming results, while existing shareholders should remain cautious and closely watch sales trends, consumer behavior and management’s outlook before making fresh investment decisions. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, Aug. 12, 2026 at 4:30 p.m. ET Senior Vice President of Strategic Finance and Investor Relations - Dorian Bertsch President and Chief Executive Officer - Jason Potter Chief Financial Officer - Ian D. Ferry Operator: Greetings, and welcome to the Grocery Outlet's Second Quarter 26 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dorian Bertsch, Senior Vice President of Strategic Finance and Investor Relations. Thank you. You may begin. Dorian Bertsch: Good afternoon, and welcome to Grocery Outlet's call to discuss financial results for the second quarter ended 07/04/2026. Speaking for management on today's call will be Jason Potter, president and chief executive officer and Ian D. Ferry, chief financial officer. Following prepared remarks from Jason and Ian, we will open the call for questions. Please note that this conference call is being webcast live and the recording will be available via playback on the Investor Relations section of the company's website. Participants on this call may make forward-looking statements within the meaning of the federal securities laws. All statements that address future operating financial, or business performance or the company's strategies or expectations are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from these statements. Description of these factors can be found in this afternoon's press release as well as in the company's periodic reports filed with the SEC all of which may be found on the Investor Relations section of the company's website or on sec.gov. The company undertakes no obligation to revise or update any forward-looking statements or information. These statements are estimates only and not a guarantee of future performance. Additionally, during today's call, the company will reference certain non GAAP financial information. Including adjusted items. Reconciliation of GAAP to non GAAP measures as well as the description, limitations, and rationale for using each measure may be found in the supplemental financial tables included in this afternoon's press release on the Investor Relations section of the company's website under News and Releases and in the company's SEC filings. And now I would like to turn it over to Jason. Jason Potter: Good afternoon, everyone, and thank you for joining us. During the second quarter, our work to stabilize the business and return growth gained momentum. A stronger opportunistic offering and sharper value communication drove sequential comp improvement and results above our outlook across key financial metrics. Revenue increased 1% to $1.19 billion with comparable store sales down 30 basis points. That was a 70 basis point improvement from Q1 despite an adverse headwind from the timing of Easter this year. Traffic grew 1.8%. Basket declined 2.1% year-over-year, but improved approximately 100 basis points from Q1 as customers responded to our stronger opportunistic offerings. Gross margin of 30.2% also exceeded our outlook due primarily to lower than planned promotional spending. Combined with disciplined cost management, the sales and margin outperformance drove adjusted EBITDA of approximately $66 million and adjusted EPS of $0.20 both well above our outlook. Our first half progress reinforces our confidence that restoring the core strengths of the Grocery Outlet model drive sustainable improvement it is still early, but the business is responding. And let me start with our primary objective, improving comps. Strengthening our opportunistic offering is central to enhancing our value and returning the business to sustainable comp growth. Since the start of this year, we have prioritized improved sourcing, product flow, visibility, and store level execution while expanding key supplier relationships. Together, these actions have significantly increased and strengthened our opportunistic assortment and improved our mix. The impact is showing up in our sales. Opportunistic comp store sales improved significantly from Q1 helping lift the total company comps into positive territory in May and June. The breadth of opportunistic SKUs increased meaningfully quarter to quarter improving quality. In addition, year-over-year growth in opportunities units per transaction also improved significantly relative to the first quarter. These are encouraging early signs that customers are responding to a broader and better selection of compelling deals as we improve our op mix. That growth is an outcome of category level focus and execution. We have prioritized and have seen outsized opportunistic improvement in grocery, our largest category. In grocery, a determined effort to revitalize supplier partnerships drove higher opportunistic product flow, opportunistic comps, and our total comps. This is how our model is designed to work and we are implementing the same actions in other categories like deli and frozen. Paul Miller is leading the work to strengthen our sourcing and merchandising capabilities. Paul returned in June as executive vice president and chief purchasing and merchandising officer. A 25 year Grocery Outlet veteran, he helped develop our opportunistic offering, deepen key supplier relationships, and enhance the treasure hunt experience. In just 2 months into his return, his merchant instincts and leadership are already making an impact here. We are very pleased to have him back. To support our revitalized offering, we are improving the ways that we communicate value to our customers. We completed our repositioning around Extreme Value and the treasure hunt supporting our product efforts with simpler signage, more prominent value items, and targeted at home and digital media. With a stronger assortment and better analytics, we can deploy marketing and promotional spending more precisely. This will allow us to rely more on product and marketing to drive comps, and less incremental price investment in the second half of the year. Even as the competitive environment remains promotional. In Q3,, we are deploying enhanced messaging to improve our price perception, we plan to deploy new signage in stores that supports our value positioning, and we will extend that messaging into our digital presence and our app. We are also taking steps to introduce parity pricing in e-commerce. These actions will make the savings available at Grocery Outlet easier for customers to see, to access, and understand. Together, stronger product, clear value messaging, and broader engagement are designed to drive more consistent comp growth. Capturing the full benefit requires strong execution in every store, which brings me to our independent operators. Our independent operators are 1 of the greatest advantages of the Grocery Outlet model. They know their communities and their customers. With the right assortment, the right tools and support, their entrepreneurial energy really brings our model to life. Over the past year, we have expanded reporting and actionable insights strengthened communication with our field organization, and invested in training. We are also spending more time in the field and engaging operators more directly. Our goal is straightforward. We want operators to spend less time sifting through data and more time serving customers to grow their businesses. A common set of facts and priorities helps operators and field teams identify issues sooner, focus on actions that matter most, and deliver a more consistent customer experience. A good example of this is how we are working with our IOs in the field. Using fleet wide data, we identify stores where targeted coaching and operational support can have the greatest impact. Our field teams then work side by side with operators on a focused set of actions, including in-stock conditions, merchandising, store standards, operating routines. This annual business review and enhanced merchandising reporting help translates the data into action. We are encouraged by these results so far. Participating stores consistently outperformed their control groups, reinforcing that meaningful improvement can come from disciplined execution of store level fundamentals. We are turning those learnings into repeatable tools and routines for the broader fleet. We are also giving operators a more immediate view of customer sentiment. 've introduced new point of sale feedback that connects customer responses with transaction data, helping operators identify service gaps and adjust their actions at store level. This capability is now in approximately 100 stores and the early results support a fleet wide rollout. In parallel, we are improving efficiency. Our new dynamic routing program removes ordering constraints and optimizes delivery routes increasing delivery quantity and improving opportunistic product flow across a significant portion of our fleet. Program is currently in approximately 200 stores, and we expect to complete the rollout over the next year. These efforts are lifting customer and operator sentiment and engagement. Customer NPS improved meaningfully again in Q2, while our IO survey feedback was overwhelmingly favorable. IO satisfaction increased across categories from last year. And the majority of our operators rated our recent systems upgrades as extremely or very valuable. Beyond the data, we are seeing increased engagement from our IOs on a variety of initiatives. These outcomes reinforce our conviction that we are focused on the right priorities. The same discipline we are bringing to store execution is also guiding how we manage the business and deploy capital. Improving operational discipline means making timely decisions directing resources to the highest value opportunities and holding every investment to rigorous performance standards. In April, we completed the closure of 36 underperforming stores as part of our store optimization plan. The outcome is a healthier portfolio we feel is better positioned for long term profitable growth. We remain on track to eliminate a $12 million drag annualized adjusted EBITDA with the majority of the benefit expected to occur in 2027. We see encouraging signs of progress in the remaining stores in the East, comparable stores in May and June significantly exceeded the company average, while Q2 margins strengthened on a year-on-year basis. That discipline also extends to our new store growth program, where we are applying greater rigor to site selection, new store underwriting, IO engagement, and execution. We remain confident in the portability of our model and the immense white space that exists. The ability to offer savings of up to 40% versus conventional players allows us to provide a unique and compelling value proposition to customers in a wide variety of geographies. However, as we continue to work on improving the core offering in our business, and year-1 store productivity, it is critical that we prioritize the highest return markets and expand capacity at an appropriate pace. As such, our 27 openings will be weighted toward in-fill opportunities. We are taking a similarly measured approach to our store refresh program, Improving the store experience remains an important long term priority. And as we continue those efforts, we are pacing our investment to ensure quality execution that allows the business to focus on our primary goal of driving comp through our opportunistic assortment. We continue to target approximately 100 refreshes completed by the end of the year. So looking to the second half, the consistent progress we have delivered since January reinforces our conviction that disciplined execution against our priorities remains the right approach, and we enter the second half with improving underlying momentum. Customers are responding to the stronger opportunistic offering, and the clearer value messaging. Operator engagement has improved and our sharper approach to execution and capital allocation is also beginning to improve performance. Strengths will be important as consumers spend cautiously the operating environment remains somewhat promotional. They will also help us navigate the near term impact of the multistate Cyclospora outbreak, Our products have not been involved in any Cyclospora recalls, but like others in the industry, we have experienced pressure on produce sales. We saw an impact in July and expect a headwind of roughly 100 basis points to total company comps for the third quarter. Even so, we are encouraged by the underlying direction of the business and remain focused on advancing our core priorities. Before I close, I would like to recognize an important leadership transition. Christopher Miller recently retired as CFO of Grocery Outlet, Christopher provided steady experienced leadership to the critical first year of our turnaround, and leaves strong finance and accounting teams in place to carry the work forward. On behalf of the board and the entire organization, I want to thank him for his leadership and wish him all the best in retirement. I am also very pleased to welcome Ian D. Ferry, many of you know as our new chief financial officer. Over the past year, Ian's become a trusted strategic partner to me and our board. His financial discipline, operating insight, and long term perspective have already made a meaningful impact here. I look forward to continuing our work together. In closing, our first half progress strengthens my confidence in Grocery Outlet's long term opportunity. it is still early, and we have work ahead, but the business is responding. Consumers continue to prioritize value, and our differentiated model is built for this environment. When we strengthen the opportunistic assortment, equip operators with better tools, and apply greater discipline to execution and investment, performance improves. We have the foundation to build a stronger, more productive, and more profitable Grocery Outlet. I want to thank our independent operators, our team members here, and our supplier partners for their hard work this quarter. I would also like to note with gratitude that we just completed our annual Independence from Hunger campaign. During which IOs partner with local nonprofits to provide critical resources to those most in need. I am proud of the positive impact our operators make in this regard in the communities they serve, work, and live. Finally, I want to thank our shareholders for your continued support and engagement. We remain committed to earning your confidence through disciplined execution and consistent results. And with that, I will turn it over to Ian. Ian D. Ferry: Thanks, Jason. As CFO, my objective is to help ensure we build a business that creates durable long term shareholder value. That means allocating capital with discipline, measuring ourselves against the right long term metrics, and communicating our progress with transparency. Our second quarter results provide further evidence that the operational improvements Jason discussed are translating into better financial performance. While our performance has ample room for improvement, stronger sales trends disciplined spending, and sharper capital allocation are beginning to improve the business and its long term earnings potential. I will start with the quarter and then discuss our full year and third quarter outlook. Unless otherwise noted, the comparisons I provide are on a year-over-year basis. Starting with the top line. Second quarter net sales increased 1% to $1.19 billion Sales from stores opened over the past 12 months more than offset the impact of the optimization plan closures and a modest decline in comparable store sales. We opened 10 stores and closed 12 during the quarter. Comparable store sales declined 30 basis points, including an approximately 50 basis point headwind from the Easter shift. This was above our outlook for a decline of 1.5% to 2%. Traffic remained positive, while Basket improved roughly 100 basis points sequentially. Importantly, comps across our opportunistic portfolio improved significantly from Q1, reinforcing our confidence in the actions underway. Gross profit dollars were flat at $360.7 million, representing a gross margin of 30.2%. Above our 29.8 to 30.0% outlook. Gross margin declined 30 basis points year over year primarily due to the promotions we instituted at the start of the year to reinforce our value position as well as store closure related markdowns and write offs partially offset by better inventory management. Sequentially, gross margin improved 60 basis points from Q1, reflecting reduced liquidation activity associated with the store optimization plan, lower promotional spending, and favorable seasonality. On a year-over-year basis, SG&A increased less than 1% to $339.5 million and as a percentage of net sales remained consistent with last year at 28.5%. Sequentially, SG&A improved 130 basis points as a percentage of net sales compared to Q1. Primarily driven by higher sales leverage optimization benefits and lower marketing expense. We also recorded $5.4 million in net restructuring charges related to the optimization plan. This included $14.8 million in cash charges partially offset by $9.4 million in noncash credits. Primarily from the net write-off of right of use lease assets and lease liabilities. Below the operating line, net interest expense was $6.6 million comparable to last year. Our GAAP effective tax rate was 38.8%, compared with 20.3% last year. Net income was $5.6 million or $0.06 per diluted share compared with $5 million or $0.05 per diluted share last year. Adjusted net income of $20.3 million or $0.20 per diluted adjusted share, compared with $22.8 million or $0.23 per diluted share last year. Adjusted EBITDA was $65.7 million or 5.5% of net sales compared with $67.7 million or 5.7% of net sales last year. Both adjusted EBITDA and diluted adjusted EPS exceeded our outlook. Turning to the balance sheet and cash flow statement. We ended the quarter with $74 million in cash, and approximately $154 million of revolver availability. Total debt net of issuance costs, was $505.6 million up $16.3 million from Q1. Net leverage remained at 1.8x adjusted EBITDA. Operating cash flow was $43.2 million compared with $73.6 million last year. The decrease primarily reflected the timing of accrued and other liabilities lower operating lease liabilities following the optimization plan, and lower net income after adjusting for noncash charges. Capital expenditures were $43.7 million or $38.7 million net of tenant improvement allowances. Now let me turn to our outlook. The actions we began implementing at the start of the year are delivering progress. Given our stronger than expected second quarter performance, we are raising the low ends of our full year financial outlook ranges. For the full year, we now expect net new store openings of 30 to 33, net sales of $4.7 billion to $4.72 billion comparable store sales in the range of negative 0.5% to 0.0%, gross margin of 29.8% to 30%, We continue to expect approximately $20 million of incremental promotional investment for the full year with spending expected to further taper in the second half as our stronger opportunistic mix and treasure hunt support underlying comp performance. We expect adjusted EBITDA of $225 million to $235 million diluted adjusted EPS of $0.51 to $0.55 per share, and capital expenditures net of tenant improvement allowances of $170 million. For the third quarter, we expect comparable store sales ranging from negative 1% to 0.0%, gross margin of 29.8% to 30%, adjusted EBITDA of $58 million to $61 million and diluted adjusted EPS of $0.14 to $0.16 per share. In summary, the initiatives we outlined at the start of the year are gaining traction. And we are managing the business with greater discipline, strengthening the opportunistic offering and customer value proposition remains our priority. We will stay focused on execution in the second half and look forward to updating you on our progress. With that, I will turn the call over to the operator for questions. Operator: Thank you. We will now be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. Pressing the star keys. 1 moment, while we poll for questions. The first question is from Jeremy Hamblin from Craig-Hallum Capital Group. Please go ahead. Will Smith: Hey. This is Will on for Jeremy. Thanks for taking our questions. Just wondering if we can or if you can share any more color on the cadence of comp trends for the quarter. And then here into Q3. And then what traffic versus basket is looking like here quarter to date? Jason Potter: Hey. Will, it is Jason here. We are making progress on our comp store sales, and we are encouraged by the sequential improvement we have had Just to walk you through that, January was meaningfully negative to remind everybody. And we have made significant progress since that point. Pre Cyclospora impact total comps have improved by about 300 basis points to the end of Q2. To talk about to answer your question on traffic, Q2 again, solid number there, 1.8. On top of the 1.5 last year. Basket declined by just over 2%. But did show about 100 basis points of sequential improvement from Q1. And that was a mix of about 1% and less than 1% inflation and some mix. But we did also, encouragingly, experienced an improvement in units per units per transaction with op in the basket. When you are thinking about the guide, I think the way that we have thought about this for Q3, as Ian's pointed out, -1% to 0%. That 100 basis point Cyclospora impact is notable. And I just a couple points there I would like to make. On that. Our produce business was running very healthy and running well above inflation prior to the outbreak. We are continuing to monitor it. We have got, you know, an understanding what is happening category to category. We think that is gonna moderate a bit into Q4, but, right now, estimating about a 100 bps. Clearly, we can see things like bag salads, a fairly large impact But we feel that this is a temporary headwind. The underlying performance of the business continues to improve and we are encouraged by what we see going forward for Q4. Will Smith: Okay. that is very helpful. Then I just wanted to understand where The opportunistic product is mixing today versus Q1. And then, like, where you would where you would like to see that by year end? And then what sort of total comp benefit you would expect to see from that change in mix from the beginning of the year? Jason Potter: Yes, certainly. First and foremost, you know, we are our pursuit of op has everything to do with creating value for customers. there is a very high correlation between op comps and our total comp business. We can see that in our store cohorts. it is the value and sales generating engine of the business. As you know, it is the heart of what drives unique treasure hunt experience. And the plan that we developed is meant to create a sustainable quality of sales and margin. What we have seen through this first half of the year up Comp accelerated meaningfully in Q2. Up about 500 basis points relative to the start of Q1. Our mix expanded well over 300 basis points and continues to accelerate. As I mentioned, we have this headwind with Cyclospora, but expect that to be temporary. And we have got some really, bright lights, as we have executed this plan. 1 great example is grocery, our largest and most important category. I know you may be curious about this. Our comps Finished at 3.5% in Q2. And that playbook being executed by Paul Miller is and now we are seeing advancing sales momentum in the next 2 most important areas, both deli and frozen, right now. Seeing good inventory flow. We have expanded our range of branded op. And, again, the confidence we have in the plan, supplier engagement, supplier acquisition, what is happening in our basket, we see the momentum in the business and, again, reflected in where we see the business going in the back half. Will Smith: Appreciate the color. Thank you. Jason Potter: You bet. Operator: The next question is from Corey Tarlowe from Jefferies. Please go ahead. Corey Tarlowe: Great. Thanks, Jason. Appreciate the time. I was wondering if you could talk just broadly around kind of what specific milestones you are using to measure any improvements in the business? And when do you feel like you can shift to perhaps, like, a more offensive posturing, if you will, And how are you kind of measuring that internal cultural shift back toward the traditional kind of treasure hunt model that Grocery Outlet tends to thrive in. Jason Potter: Yeah. I think the things that we have been measuring and holding ourselves accountable to, we have made progress across all we think are the most important KPIs. Continued traffic growth, which is really important. We saw some basket expansion, we think it is important. Also noted, improving net promoter scores from the beginning of the year right through to the end of the quarter. Our op mix has expanded. The comps have expanded. We see a lot of improvement in execution related to our reporting and visibility that is helped folks across the supply chain. Manage the flow of inventory both when they are writing POs, when they are meeting with suppliers, helping us execute with speed and more precision, which is really important. So seeing good inventory flow, good quality of opportunistic product, which is something we are measuring. We measure things like the amount of variety, and balancing that, as well as things like turns or GMROI. Those are all important elements to measure. And, ultimately, looking at what the customers are doing and the trips it is generating and what that means for you know, things like net NPS and value score and ultimately, we expect to have that show up in a higher level of comp sales. In terms of both traffic and basket. Corey Tarlowe: that is helpful. And then just as a follow-up, a number of your competitors have highlighted investing into price throughout the back half. So it feels as if the grocery environment will be getting more competitive as we look over the next several months I am curious how you think about your strategy in light of how some of your competitors are going to be posturing their pricing. Thanks. Jason Potter: Yeah. No. Great question. Look, it is always competitive out there in my 30 years. You are always fighting it out to win the customer's hearts. And we are obviously alert to the competitive activity and some of the announcements that have been made as well as in the syndicated data seeing a recent uptick in promotion. We know the customer searching for value. Customer's under pressure. We all read the news and can see what happens at the pump and so on. I think what we have done to grow opportunistic this year our positioning there, the plan we are executing against is right on the money, so to speak. To deal with this issue. And you know, if you look at kind of what happened in our business in this first half and specifically in Q2, our retail inflation was a little bit below 1%. And that has a lot to do with what we are doing with op. And, you know, when we think about competition or price, there is many things to evaluate We are continually monitoring and measuring our pricing against a number of different competitors across major MSAs. We continue to see a nice price-gapping on a basket of goods for us, 15% to 20%. Low mass, 30% to 40%, against conventional. I think that is important to note. And for us, when we are dealing with these kinds of things, the best way to deal with it is through op. It opportunistic is a pretty magical thing for us. It drives sales and margins. It drives value for the customer. You know, Paul came to me this week and shared a example of 50 plus truckloads of a well known relevant branded drink Sells for $8 in the market. They will be selling for under $1 in the market. Sometime next week. Those kinds of things just really displace, comparisons and is a big part of what drives customers to our stores. And you know, I think staying competitive and making sure that we are paying attention to what is happening in market is always gonna be an important element of what we do here. But continue to see that being reinforced and encouraged by our work on opportunistic supply, variety, quality, distribution, an inventory flow and turns. it is very helpful. Thanks so much, and best of luck. Corey Tarlowe: Thank you. Operator: The next question is from Robert Ohmes from BofA Securities. Please go ahead. Robert Ohmes: Oh, hey, Jason. Hey. I was hoping as a follow-up, could you help us can you maybe parse out, you know, it sounds like you have really got opportunistic, is an important initiative and it is and it is working. You are seeing great things, but you also have the store refresh program, and we think of those 2 things, can you sort of help us think about the you know, what kind of know, how much each of those 2 things are going to drive and how much are they interrelated with each other. Jason Potter: Yeah. Great question, Robert Ohmes. You know, clearly, we continue to believe in improving the in-store experiences as an essential part of the strategy. And what we have done in the first half of this year is to make sure that everybody in the company's priority on restoring op across the network. that is what is driving improvement in our business. Clearly, you know, refresh is an important component of that. Luke I said, on the recording, 100 stores by the end of the year is on track. Continue to get great feedback from customers and operators. We think that what is important here and 1 of the calibrations we made as we have focused on improving value and improving op is to make sure that we are supporting operators with the tools and the assistance to ensure consistent execution as we do these rollouts. We had more variability in the last couple cohorts than we would like, and we wanted to shorten the disruption period to optimize the results. And so we calibrated that slightly. And so we continue to think that is going to be an important long term element of our turnaround story. But the main event here for us is improving value through opportunistic supply. that is gonna continue to be the focus of the company in the back half. that is really helpful. Robert Ohmes: And then my follow-up on that is you mentioned, earlier in the call the supplier partnerships improving or recovering or something like that. Can you what happened with the supplier partnerships in how much improvement is there still to come from here? Jason Potter: Look. I think I just wanna say we are really proud of how the team's engage with suppliers and the relationships that the company's built with supply community over many decades, frankly. it is a critical point of difference for Grocery Outlet and part of our strategic moat. Paul Miller in his leadership brings a special understanding of supplier connection I do not think we lost that connection, but I think we as we have, really outlined the plan for what we are gonna do with opportunistic it is an important point to call out that engaging with suppliers face to face meetings, being a 1 stop solution for our supply community, taking quick care of their brands, being good brand stewards, and responding in a, rapid way is all part of Paul's philosophy. And, you know, we are seeing good results there. New supplier acquisitions up above 11% this year. And we are seeing just kind of great results across the board as the deals come in, and it is just a doubling down of something that we have always done well. And just made sure that the entire company under Paul's leadership is focused on it. Robert Ohmes: That sounds great. Thank you. Robert Ohmes. Operator: The next question pardon me, the next is from Edward Kelly from Wells Fargo. Please go ahead. Edward Kelly: Yes. Hi. Good afternoon, everyone. So, you know, the business certainly seems to be starting to turn the corner. As we think about, you know, guidance, you did not flow much of the up upside this quarter or your better optimism, I guess, into the full year guide. Is that you know, just cyclospora, or are there some other incremental offsets? And then related to the Cyclospora, and the 100 basis point impact, is that just July through August so far that impacted that you expect that to continue all quarter? Just kind of curious as to how you came up with that. Ian D. Ferry: Yeah. Hey. This is Ian. I will take that. So if you look at the beat, for Q2, and we are pleased with where the performance ended up, we beat the midpoint by about $9 million. Roughly half of that was due to outperformance on comp and gross margin rate, Of the remaining $4.5 million, 2-thirds of that is SG&A dollars that will actually shift into the back half of the year. Primarily the third quarter. And then 1.5 was just, good cost discipline versus plan. So the way that I would think about the quarter is, roughly a $6 million beat versus midpoint on an organic basis. with $3 million shifting. And then as you think about Q3, you know, there will be a sequential step down in gross margins even though we are further tapering promotional investment and there is a little bit of store closure costs that roll off, the produce issues that Jason highlighted do come with elevated shrink, and that will be a meaningful hit in the third quarter that will flow through into gross margins. And we also have a just a modest level of seasonality. So you net all that out and then we look at the balance of the year, we felt like, the guidance that we gave is appropriate, and we want to be prudent with our outlook. Edward Kelly: And then 100 basis points? Ian D. Ferry: Yeah. Yeah. Of the Cyclospora we are, we are basically assuming that the pressure is gonna be with us through the end of the quarter. Edward Kelly: Okay. And then, Jason, I wanted to ask you, you know, talked about the promotion, you know, just sort of pulling back and normalizing it Into the back half of the year. But then Corey. Operator: You are breaking up there. I do not know, operator, if you can just make sure the line is clear there. We just did not hear anything. We are getting a few words in there. Edward Kelly: Corey. Yeah. Corey. Maybe it was the speaker. So, Jason, I wanted to ask you on promotional side. You talked about, maybe pulling back or normalizing to some extent in the back half. And then some of that void gets filled, I guess, with value communication and, you know, maybe it is increased you know, op you know, as well, but the backdrop is competitive. I am just kind of curious as to how you feel about sustaining, you know, some of the momentum that is improved, you know, while you know, you normalize on the promo side. Jason Potter: Yeah. No. Great question. So couple things to say. You know, Grocery Outlet has not been traditionally a promotional company, and we do not intend to continue that. We create excitement and value through obviously, the branded op deals and as you pointed out, the treasure hunt experience. We did establish early in the year this $20 million promotional bridge. This is a synthetic bridge that was designed to supplement our op offering as we rebuilt the offering. Now we are on track with that plan to rebuild our op offering, which is why, the focus of the company is, everyone is attention is turned there. We are on track to taper those promotions, those replacement promotions, if you will, as op mix is fully sort of restored by the end of the third quarter. So couple of things there. I look at the weight of op, number of deals at various levels of savings, and the KPIs that associate with, call it, the promotion plan is also on track. Pleased with the progress on growing op, we do not expect to see the need for more promotional investment beyond what we have already discussed. And to your point, we remain disciplined but responsive. Obviously, maintaining the right competitive price gaps is critical. But I just wanna reinforce we think we are on the right track and we will monitor if anything changes. But expect that our plan is prudent and appropriate for the back half of the year. Thank you. Operator: Thank you. Next question is from Oliver Chen from TD Cowen. Please go ahead. Iris: Hi, good afternoon. This is Iris on for Oliver. You have described Grocery Outlet as a countercyclical model that can benefit when consumers come under greater pressure And I am just wondering, as we have moved through the quarter, have you seen any change in customer behavior that gives you confidence that the value perception is becoming more visible to shoppers, whether it is through a new customer acquisition, trip frequency, or basket? Thank you. Jason Potter: Yes. Thanks for the question. Yes. Clearly, generally, what we seen in the past is that you will see pressure in the basket, first, and then obviously, that with when trade down happens, we get traffic. We have not seen that yet, but we think the work we are doing positions us well for that. As I mentioned, traffic did increase just about 2% in the quarter. that is been sort of running about that 2% mark, which is intent of our plan this year. We also saw improvement in our basket, and we did see improvement in UPT relative to op in the basket. So our customers are recognizing value. They are seeing more of it in the store. that is showing up in the underlying metrics. And we believe and they are convinced that is what is driving our sales. And the relationship between op value and comps are connected And drives the heart of the differentiation that we have in the business. So that is what I would share today on that front. Iris: Okay. Got it. And then just as a follow-up, I know that last quarter, you noted for United Grocery Outlet and expected it to be a 2026 discussion. Are you able to provide an update on where that process stands today and whether your view of the strategic fit of the business has evolved since then? Ian D. Ferry: Yeah. Hey, Iris. This is Ian. I can take that. So you are right. We do think it is a 2026 conversation. there is work ongoing. We are looking at a variety of options. When that work concludes, we will update you as soon as that happens, but no update today of any note. Iris: Got it. Thank you. Operator: The next question is from John Heinbockel from Guggenheim Partners. Please go ahead. John Heinbockel: Jason. I wanted to ask, as you lean more into up, so what is changing, if anything, with planograms and space allocation toward that And then, you know, think of if you think about balance leaning into up heavier, I think historically, right, you guys have been pretty good about avoiding markdowns. Even on closed code product Let me talk about that tension. Know, leaning in and trying to avoid markdowns. Jason Potter: Yeah. Great question, John. So we do not we have kind of call it planograms is sort of a industry term where you have got obviously, every item is allocated in the space. We have space allocation. Mhmm. And so what we did in the first half of the year, we did mention that we would be discontinuing 4 to 500 MTO and private label items to make space for more opportunistic variety. I am pleased to report that we did get that done, made those transitions that is shown up in sales and in store. And, the vast majority of those markdowns, if there were any, were done already in the first half. We always have some markdowns when we are changing, you know, product out. The business year to year will sell 80 to 100 thousand unique SKUs as, products come and go. So it is a normal cadence for the business to manage, and, happy how that first half has gone, John. John Heinbockel: Maybe as a follow-up, the think you talked about a lot of the 27 openings were a bigger percentage will be in existing markets. You is the plan to open more than you did this year, right, in 2027 or about the same And then I think the idea with when you did UGO is to have volume sufficient on the East Coast to really lean into our product. I think you are probably there. We do not need to open that many more on the East Coast to get access to op. Is that fair? Jason Potter: Yeah. On your first question, we have not prepared yet to release sort of a store count for next year, but it is our intent to open much more infill. Obviously, as we stated, we are excited about the long term white space. And growth potential of the business. And in the near term, you know, we have made some tough decisions to make sure that we are focused on in-fill opportunities, that really allows us to leverage the brand, power the brand, low the people power. You know, our IO community is really important, and the density of stores helps with that. Distribution strength, obviously, which you know, the core markets We have got a well oiled machine there and supported by disciplined underwriting, we think, is the right approach in the near term. To your point on the East, we just opened a new DC to support that group of stores. And we feel that is absolutely helping our results in the East. We are pleased with the performance of the stores post closure work. Those stores are running profitably as a group. And, ahead of plan and, positive comps already this year. So, all of those elements, we are feeling good about those decisions, John. John Heinbockel: Thank you. Jason Potter: You are welcome. Operator: The next question is from Joseph Feldman from Telsey Advisory Group. Please go ahead. Joseph Feldman: Hey, guys. Thanks for taking the question. I wanted to ask dig in on that field operations changes you have made. Can you share just a little more color on that? Like, what is actually different that the field operation I guess, field managers or whatever they are called, are doing in the stores and how they are helping in a different way and what maybe sales and costs are related to that? Thanks. Jason Potter: Yeah. No. it is a it is a great question. Look, first and foremost, the IO model is a unique competitive advantage for us. We know that it is essential for us in the long term to continue to improve support for our operators. You know, execution is a huge component of the customer experience, and the intent of the team is double down on communication and collaboration with our operators, Specifically, we are adding field support. that is been done We have implemented things like dynamic routing that I mentioned in my opening remarks. That really helps with op flow and in-stocks. So there is support there. Implementing things like a store level POS customer feedback reporting to give our IOs, much more salient information about specific customer feedback, trends, and the DSMs work directly with them on, you know, action plans to help make improvements. needed. Then, 1 of the biggest ones we have had this year is really, unlocking some of the data We have this process we call an annual business review, but it is really using fleet wide data. The field teams provide our operators. A ranking of against another group of stores, similar state, similar volumes, and allow them to see in a way, you know, margin, sales, underlying cost drivers, and then support it with a suite of reporting that helps them dial in on opportunities drive sales, to drive, margins, to drive improvement in the business. This more frequent and ongoing collaboration and communication is definitely a change. And I think everybody in the company is including the operators, are excited about that support and direction. that is really helpful. Joseph Feldman: Thank you. Maybe as a follow-up, probably asked you guys this in the past, but how are you communicating the changes to your existing base or prior customers? Like, you know, I know in the past, people used to love the opportunistic goods. Now that you have them back, you are flowing it into the stores, like, are you how are those customers finding out about it? And to maybe recapture some of the ones that may have left Grocery Outlet? Thanks. Jason Potter: Yeah. No. Great question. Clearly, you know, driving value is key. We introduced extreme value in the front half of the year across channels, but we think it is a clear price messaging, clear value communication. We have updated some signage, and we have a actually, a kit going out to all stores this quarter. To support our eightieth anniversary. We think that is gonna be a helpful additional support piece. We continue to adjust our media mix. To reach customers more effectively related to the groups that really get excited about the treasure hunt. They love discovery. They love value. And we are seeing that work is helping satisfaction scores and resonating with those groups of customers, including lapse customers. Joseph Feldman: Got it. that is helpful. Thanks. Good luck with this, third quarter. Jason Potter: Thank you. Operator: The next question is from Simeon Gutman from Morgan Stanley. Please go ahead. Simeon Ari Gutman: Hey, Jason. Hey, Ian. First, I want to ask about this improvement through the anatomy of your customer cohorts. So are you seeing best customers shop more, average ones stepping up? Then I do not know if there is a component of new customers coming to the brand. Jason Potter: Yeah. I think kind of high level, top level, Simeon Gutman. Thanks for the question. Driving traffic was our first objective, and I think the that is proven to be effective in the first half. We are gonna continue to lean in there with our plan. Obviously, some of what you do is to drive frequency, and the other pieces that help long term are continuing to improve your business and your execution to work on things like the basket. So there is always a combination of things that you are trying to achieve, but our first objective is to really dial in the value piece, get recognition for that, drive frequency, and drive the traffic. that is the key priority. Simeon Ari Gutman: And then related to it, you know, you have transactions. It sounds like, you know, the basket's still down. You mentioned grocery is getting fixed. they are getting better, they are positive. I think you called out deli and frozen as works in progress. How impactful can opportunistic be there Is that just inherently more of an everyday category? And what is that diagnosis? Meaning, how do you change the basket? From here? I know this company used to comp, you know, much higher than where we were. So what are the things that, you know, you need to finish to close the gap? Jason Potter: Yeah. We are just executing the same playbook. Those are the 2 next most important categories for op. that is why I point them out. They are large important, and op will play a huge role in the turnaround here and getting sales. And those 2 categories are areas we see as the next most logical place to really drive sales. We are getting early, you know, good, positive early results as the team has, you know, not totally tuned everything in, but, definitely we are seeing momentum there and excited about what that is gonna mean as we go forward. Operator: The next question is from Mike Baker from D.A. Davidson. Michael Baker: Great. Thanks. Kind of a follow-up on what Simeon was just asking or maybe getting to. Your guidance, even if you add back Cyclospora is about flat. Yes, grocery, a big part of your business is up 3%, I think you said. You are adding that playbook to other big categories. I think opportunistic is now probably, if you set up 300 basis points, that is about 48% now versus it will get to 50. Like, you are getting there. You are doing all the things. When all the things are implemented, What do we think the long term comp should be? I presume something better than, you know, flat to up 1% if you add back the Cyclospora. Jason Potter: Yeah. We great question. We definitely see continued acceleration through the year. And, you know, we fully expect the business to get back to a healthy level of comps something north well north of inflation. So I think in the past, this business comp 3 to 5 on a pretty regular basis and we do not see a reason why we cannot do that. Michael Baker: Okay. Yeah. Fair enough. That would certainly help. 1 other question. You said something, if I caught it right, about variability and the most recent implementation of systems So if you could talk a little bit and then slowing it down, I may have misunderstood, but can you talk about can you flesh that out a little bit? Jason Potter: Yeah. No, no. I was not referring to systems. Happily, we have nothing to report on systems. We are we are we have planted the flag, and our systems are stable. Good progress there a couple quarters ago. What I was referring to as the last couple of cohorts of refresh stores, and we found that just the length of time to make the changes was disrupting customers, and what the team's doing right now is dialing that down to make those changeovers much more rapidly with better support pre and post. Order to make sure that we do not turn people away as we are making what we think are positive changes. So that is what I was referencing. Michael Baker: Okay. Understood. Thank you. Operator: Thank you. The next question is from Bill Kirk from ROTH Capital Partners. Please go ahead. Bill Kirk: Good evening, everyone. Jason and Ian, you both mentioned and even quantified the adverse impact of Easter timing in 2Q. What I was wondering, I guess, is at the end of 2Q, did you have a positive July 4 timing benefit? And if so, how large was that? Ian D. Ferry: It was immaterial. Bill Kirk: I see. Okay. And then, Ian, in your in your prepared remarks, you know, you talked about I think you opened with the importance of building a durable model so focused on creating long term shareholder value. So philosophically, speaking, how do you evaluate the decision to ease up on promotion and pricing in the context of your focus on helping build that durable sustainable model? Ian D. Ferry: Yeah. Good question. I mean, as you think about what drives long term equity, value creation, it is consistency of growth paired with improving returns on capital. We have a long way to go, but we think we are making progress along both of those fronts. I think the good news for us is that opportunistic really drives benefit to everyone in the model, whether you are a customer, a shareholder, or an IO. So there is great savings. It comes at a high margin. And it delivers good excitement for the customer. So what we have seen is we have already started to taper the promotions And the reason why we have been able to do that is because we have been increasing op. And the customer does not really understand the distinction between a promoted branded item or op. They just see deals. And so as you mix out some of the more promotional stuff and mix in op, it is not something that they noticed. So we really did view that 20 million as a synthetic bridge. We expect it to be done, by the end of the third quarter. And, you know, as we look into 2027, perhaps we have a tailwind on gross margin to extent. We expect to be back in a more normalized comp level And my philosophy as CFO is that we absolutely should be driving as and A leverage. So, you know, as you look to next year, we certainly hope, and it is our expectation, we will have a more normalized looking P&L. Bill Kirk: Frank you, Ian. that is what I was looking for. I will pass it along. Operator: As a reminder, to ask a question, please press 1. There are no further questions at this time. I would like to turn the floor back over to Jason Potter for closing comments. Jason Potter: Well, thanks very much for your questions today. I look forward to continued engagement and reporting continued improvement in our business in the future. Thanks everybody for today and wish you well. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Grocery Outlet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Grocery Outlet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $419,408!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,348,694!* Now, it’s worth noting Stock Advisor’s total average return is 966% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 19, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Grocery Outlet (GO) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Grocery Outlet’s results for the second quarter were met with a notably positive market response, as the company delivered sequential improvements in same-store sales and adjusted profitability. Management attributed this progress to stronger sourcing of opportunistic inventory and enhanced value communication, which drove higher traffic and improved customer perception. CEO Jason Potter highlighted a “significant increase and strengthening” of the company’s opportunistic assortment and noted, “Customers are responding to a broader and better selection of compelling deals as we improve our op mix.” The company also benefited from disciplined cost management, with gross margin and adjusted EBITDA both exceeding internal expectations. The recent closure of underperforming stores and a focus on operational execution further contributed to the quarter’s outperformance. Is now the time to buy GO? Find out in our full research report (it’s free). Revenue: $1.19 billion vs analyst estimates of $1.17 billion (1.1% year-on-year growth, 2.1% beat) Adjusted EBITDA: $65.66 million vs analyst estimates of $56.53 million (5.5% margin, 16.1% beat) The company lifted its revenue guidance for the full year to $4.71 billion at the midpoint from $4.66 billion, a 1.1% increase Management raised its full-year Adjusted EPS guidance to $0.53 at the midpoint, a 6% increase EBITDA guidance for the full year is $230 million at the midpoint, above analyst estimates of $226 million Operating Margin: 1.3%, in line with the same quarter last year Locations: 547 at quarter end, down from 552 in the same quarter last year Same-Store Sales were flat year on year (1.1% in the same quarter last year) Market Capitalization: $1.10 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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. Will Smith (Craig-Hallum Capital Group) asked about the cadence of comp trends and traffic versus basket. CEO Jason Potter detailed sequential improvements, noting a 1.8% traffic increase and improvements in units per transaction from opportunistic products, attributing recent headwinds to the Cyclospora outbreak. Corey Tarlowe (Jefferies) questioned milestones for measuring business improvement and the competitive environment. Potter highlighted ongoing traffic growth, expanding opportunistic mix, and stated, “the best way to deal with [competition] is through op,” referencing their opportunistic supply advantages. Robert Ohmes (BofA Securities) inquired about the relative impact of opportunistic inventory versus store refresh initiatives. Potter clarified that while store refreshes are important, restoring opportunistic supply is the primary driver of improved performance. Edward Kelly (Wells Fargo) asked why the full-year guidance didn’t incorporate more upside from Q2’s results. CFO Ian D. Ferry explained the decision reflected prudence due to the Cyclospora impact and some SG&A timing shifting costs into the back half of the year. Iris (TD Cowen) queried if value perception is becoming more visible to shoppers. Potter responded that traffic gains and improvement in basket metrics suggest customers recognize and respond to the enhanced value proposition. In the coming quarters, the StockStory team will monitor (1) the pace and sustainability of opportunistic mix growth, (2) the tapering of promotional investments and corresponding impact on gross margins, and (3) the resolution of temporary produce headwinds related to Cyclospora. Progress in store refresh initiatives, operator engagement, and customer response to refreshed value messaging will also be critical in assessing execution of Grocery Outlet’s turnaround strategy. Grocery Outlet currently trades at $11.02, up from $10.17 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

This article first appeared on GuruFocus. Revenue: Net sales increased 1% to $1.19 billion for the second quarter ended July 4, 2026. Comparable Store Sales: Declined 30 basis points, including an approximately 50 basis point headwind from the Easter shift, but improved 70 basis points from Q1. Traffic: Grew 1.8% year-over-year. Basket: Declined 2.1% year-over-year, but improved approximately 100 basis points from Q1. Gross Margin: 30.2%, above the company's outlook of 29.8% to 30.0%, and improved 60 basis points sequentially from Q1. SG&A: Increased less than 1% to $339.5 million, remaining consistent with last year at 28.5% of net sales. Net Income: $5.6 million, or $0.06 per diluted share, compared with $5 million, or $0.05 per diluted share, last year. Adjusted Net Income: $20.3 million, or $0.20 per diluted adjusted share, compared with $22.8 million, or $0.23 per diluted adjusted share, last year. Adjusted EBITDA: $65.7 million, or 5.5% of net sales, compared with $67.7 million, or 5.7% of net sales, last year. Operating Cash Flow: $43.2 million, compared with $73.6 million last year. Capital Expenditures: $43.7 million, or $38.7 million net of tenant improvement allowances. Store Openings/Closures: Opened 10 stores and closed 12 during the quarter, including the completion of 36 underperforming store closures in April as part of the store optimization plan. Net Leverage: Remained at 1.8 times adjusted EBITDA. Warning! GuruFocus has detected 8 Warning Signs with GO. Is GO fairly valued? Test your thesis with our free DCF calculator. Release Date: August 12, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Comparable store sales improved sequentially by 70 basis points from Q1, with traffic growing 1.8% and comps turning positive in May and June. The opportunistic offering strengthened significantly, with opportunistic comp store sales improving by about 500 basis points from the start of Q1 and mix expanding by over 300 basis points. Grocery, the largest category, delivered a 3.5% comp in Q2, demonstrating the success of the revitalized supplier partnerships and merchandising strategy. Gross margin of 30.2% exceeded the company's outlook, driven by lower-than-planned promotional spending and better inventory management. The store optimization plan is on track to eliminate a $12 million drag on annualized adjusted EBITDA, with remaining East Coast stores outperforming the company average in May and June. Customer and operator sentiment improved, with customer NPS rising meaningfully and IO satisfaction increasing across categories, supported by new tools like POS feedback and dynamic routing. Comparable store sales still declined 30 basis points in Q2, impacted by a 50 basis point headwind from the Easter shift, and basket size declined 2.1% year-over-year. The multi-state Cyclospora outbreak is expected to create a headwind of roughly 100 basis points to total company comps in Q3, pressuring produce sales and increasing shrink. Gross margin declined 30 basis points year-over-year due to promotional investments and store closure-related markdowns, partially offset by better inventory management. Adjusted EBITDA and adjusted EPS declined year-over-year, with adjusted EBITDA falling to $65.7 million from $67.7 million and adjusted EPS to $0.20 from $0.23. Operating cash flow decreased significantly to $43.2 million from $73.6 million, reflecting timing of liabilities and lower net income after non-cash adjustments. The company is taking a measured approach to growth, with 2027 openings weighted toward infill opportunities and a paced store refresh program, indicating a slower expansion pace. Q: Can you provide more color on the cadence of comp trends through the quarter and into Q3, and what traffic versus basket is looking like quarter to date?A: Jason Potter (President and CEO): We are encouraged by the sequential improvement in comp store sales. Pre-Cyclospora impact, total comps had improved by about 300 basis points from January to the end of Q2. Traffic grew 1.8% in Q2, while the basket declined by just over 2%, but improved about 100 basis points sequentially from Q1. For Q3, we expect a 100 basis point headwind from the Cyclospora outbreak, which we view as temporary, but the underlying performance of the business continues to improve. Q: Where is the opportunistic product mixing today versus Q1, and what total comp benefit do you expect from that change in mix?A: Jason Potter (President and CEO): Our pursuit of opportunistic product is about creating value for customers, as there is a high correlation between opportunistic comps and total comps. In Q2, opportunistic comps accelerated meaningfully, up about 500 basis points relative to the start of Q1, and our mix expanded well over 300 basis points. Our grocery category, the largest, finished with comps of 3.5% in Q2. We are now seeing advancing sales momentum in deli and frozen, and we have confidence in the plan for the back half of the year. Q: What specific milestones are you using to measure improvements in the business, and when can you shift to a more offensive posture?A: Jason Potter (President and CEO): We are measuring progress across our most important KPIs, including continued traffic growth, basket expansion, improving net promoter scores, and expanded opportunistic mix. We are also measuring the quality of opportunistic product, variety, and inventory turns. We expect these efforts to ultimately show up in higher comp sales in both traffic and basket. Q: How do you think about your strategy in light of competitors investing into price and a more promotional grocery environment?A: Jason Potter (President and CEO): We are alert to competitive activity, but our plan to grow opportunistic product is the right approach to deal with this issue. Our retail inflation was a little below 1% in Q2, and we continue to see a nice price gap on a basket of goods, 15% to 20% below mass and 30% to 40% against conventional. Opportunistic deals, like a well-known branded drink selling for under $1 versus $8 in the market, drive customers to our stores and displace comparisons. Q: Can you parse out how much the opportunistic initiative and the store refresh program will each drive performance, and how interrelated are they?A: Jason Potter (President and CEO): Improving the in-store experience remains an essential part of the strategy, but the main event is improving value through opportunistic supply. We are on track for approximately 100 store refreshes by the end of the year. We have calibrated the refresh program to shorten the disruption period and optimize results, but the focus of the company in the back half remains on restoring opportunistic product across the network. Q: What happened with supplier partnerships, and how much improvement is there to come?A: Jason Potter (President and CEO): We are proud of the relationships the company has built with the supply community over many decades. Paul Miller's leadership brings a special understanding of supplier connections, focusing on face-to-face meetings and being a one-stop solution. New supplier acquisitions are up above 11% this year, and we are seeing great results as deals come in. Q: You didn't flow much of the upside from Q2 into the full year guide. Is that just Cyclospora or are there other incremental offsets?A: Ian Ferry (CFO): We beat the Q2 midpoint by about $9 million. Roughly half was due to outperformance on comp and gross margin rate. Of the remaining $4.5 million, two-thirds is SG&A dollars that will shift into the back half, primarily Q3. For Q3, there will be a sequential step down in gross margins due to produce issues from Cyclospora, which come with elevated shrink, and modest seasonality. We felt the guidance we gave is appropriate and we want to be prudent with our outlook. Q: How do you feel about sustaining momentum while you normalize on the promotional side, given the competitive backdrop?A: Jason Potter (President and CEO): Grocery Outlet has not traditionally been a promotional company. We established a $20 million promotional bridge early in the year to supplement our opportunistic offering as we rebuilt it. We are on track to taper those replacement promotions as the opportunistic mix is fully restored by the end of the third quarter. We don't expect to need more promotional investment beyond what we've discussed, and we remain disciplined but responsive. Q: Have you seen any change in customer behavior that gives you confidence that value perception is becoming more visible to shoppers?A: Jason Potter (President and CEO): Traffic increased just about 2% in the quarter, running above that mark, which is the intent of our plan. We also saw improvement in our basket and in units per transaction relative to opportunistic product. Customers are recognizing value and seeing more of it in the store, which is showing up in the underlying metrics and driving our sales. Q: Can you provide an update on the United Grocery Outlet process and whether your view of the strategic fit has evolved?A: Ian Ferry (CFO): We do think it's a 2026 conversation. There is work ongoing and we are looking at a variety of options. When that work concludes, we will update you as soon as that happens, but there is no update today. Q: As you lean more into opportunistic product, what is changing with planograms and space allocation, and how are you avoiding markdowns?A: Jason Potter (President and CEO): We have space allocation rather than traditional planograms. We discontinued 400 to 500 MTO and private label items to make space for more opportunistic variety, and we got that done in the first half. The vast majority of markdowns, if any, were done already in the first half. The business will sell 80,000 to 100,000 unique SKUs year-to-year as products come and go, so managing markdowns is a normal cadence for the business.For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed sequential comp improvement to a revitalized opportunistic offering, which saw a 500 basis point acceleration in performance relative to the start of Q1. The company successfully executed a strategic pivot by discontinuing 400 to 500 non-opportunistic items to expand space for high-value branded deals. Operational focus has shifted toward 'in-fill' store growth for 2027 to leverage existing brand power, distribution density, and independent operator (IO) expertise. The return of Paul Miller as Chief Purchasing Officer has accelerated supplier acquisition, with new supplier partnerships increasing by over 11% this year. Management is utilizing fleet-wide data to provide IOs with actionable insights, resulting in participating stores consistently outperforming control groups. Gross margin outperformance was driven primarily by lower-than-planned promotional spending as the opportunistic mix strengthened, which, combined with disciplined cost management, drove adjusted EBITDA and EPS above the company's outlook. The $20 million promotional bridge established to supplement value is expected to fully taper by the end of Q3 as the opportunistic mix is restored. Q3 guidance includes a 100 basis point headwind assumption due to a multi-state Cyclospora outbreak impacting produce sales and increasing shrink. Management expects the business to return to historical healthy comp levels of 3% to 5% as the opportunistic playbook is applied to deli and frozen categories. The store refresh program is being paced at approximately 100 stores for the year to ensure quality execution and minimize customer disruption. The company anticipates a $12 million annualized adjusted EBITDA benefit from the closure of 36 underperforming stores, with the majority realized in 2027. Completed the closure of 36 underperforming stores in April to optimize the portfolio for long-term profitable growth. Recorded $5.4 million in net restructuring charges related to the optimization plan during the second quarter. Transitioned to a new CFO, Ian D. Ferry, following the retirement of Christopher Miller after the first year of the turnaround. Identified a temporary headwind in the produce category due to industry-wide Cyclospora concerns, though the company's products were not involved in recalls. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management stated they do not intend to remain a promotional company, instead relying on 'magical' opportunistic deals to drive value. The company maintains a 15% to 20% price gap against low-cost mass retailers and 30% to 40% against conventional grocers. Management clarified that UGO remains a 2026 conversation with various options currently under evaluation. The East Coast stores are now running profitably as a group following the recent store optimization work and new DC support. Management acknowledged variability in recent refresh cohorts and is shortening disruption periods to optimize results. The focus remains on ensuring store-level fundamentals like in-stock conditions and merchandising standards are met during transitions.

Grocery Outlet Holding Corp. GO reported second-quarter 2026 results, with both top and bottom lines surpassing the Zacks Consensus Estimate. While net sales increased year over year, adjusted earnings per share declined from the year-ago period. Results reflected sequential improvement in comparable-store sales and customer basket trends, along with continued traction from efforts to strengthen the company’s opportunistic offering and value perception.Management also raised several key components of its fiscal 2026 outlook following second-quarter results that came in ahead of its expectations. The company improved its comparable-store sales forecast and increased the lower ends of its net sales, adjusted EBITDA and adjusted earnings-per-share guidance ranges. Grocery Outlet delivered adjusted earnings of 20 cents a share for the second quarter, beating the Zacks Consensus Estimate of 12 cents by 66.7%. The figure declined from adjusted earnings of 23 cents reported in the year-ago quarter. Net sales increased 1.1% year over year to $1,192.8 million, surpassing the consensus mark of $1,167 million by 2.2%. The improvement was driven by sales from new stores, partially offset by lower sales stemming from store closures under the Optimization Plan and a decline in comparable-store sales.Comparable-store sales declined 0.3% in the quarter, improving from the 1% drop registered in the first quarter. The second-quarter decrease reflected a 2.1% decline in average transaction size, partly offset by a 1.8% increase in the number of transactions. Management highlighted sequential improvement in the basket while traffic remained positive, signaling progress in its efforts to strengthen value perception and restore the core strengths of the business. Grocery Outlet Holding Corp. price-consensus-eps-surprise-chart | Grocery Outlet Holding Corp. Quote Gross profit was relatively unchanged year over year at $360.7 million. Gross margin contracted 40 basis points to 30.2% from 30.6% in the prior-year quarter. The contraction primarily reflected product promotions aimed at driving sales and inventory markdowns and write-offs associated with Optimization Plan store closures, partly offset by improvements in inventory management.Selling, general and administrative expenses increased slightly to $339.5 million from $336.8 million in the year-ago period. As a percentage of net sales, SG&A expenses were relatively flat year over year at 28.5%.Adjusted EBITDA declined 3.1% year over year to $65.7 million from $67.7 million. Adjusted EBITDA margin of 5.5% contracted 20 basis points year over year.    The company posted operating income of $15.8 million, up from $12.8 million in the year-ago quarter. The latest quarter included $5.4 million in net restructuring charges related to the Optimization Plan. Grocery Outlet opened 10 new stores and closed 12 stores during the quarter, including nine closures related to its Optimization Plan, ending the period with 547 stores across 16 states.The company completed the closure of all 36 financially underperforming stores identified under the Optimization Plan during the first half of fiscal 2026. For fiscal 2026, Grocery Outlet continues to expect 30-33 net new store openings, excluding closures related to the Optimization Plan. Grocery Outlet ended the quarter with cash and cash equivalents of $74.2 million compared with $69.6 million at fiscal 2025-end. Long-term debt, net, totaled $490.6 million, while stockholders’ equity stood at $816.6 million.This Zacks Rank #4 (Sell) company generated $43.2 million in operating cash flow during the second quarter compared with $73.6 million in the prior-year period. The decline primarily reflected the timing of accrued and other liabilities, lower operating lease liabilities stemming from the Optimization Plan and lower net income after adjusting for non-cash charges.Capital expenditures, net of tenant improvement allowances, were $38.7 million compared with $58.3 million in the year-ago quarter. Management continues to expect fiscal 2026 capital expenditures of about $170 million, net of tenant improvement allowances. Management raised several components of its fiscal 2026 outlook, reflecting improved operating trends and second-quarter results that came in ahead of its expectations.Grocery Outlet now expects net sales of $4.70-$4.72 billion, raising the lower end from the previous guidance of $4.60-$4.72 billion. Comparable-store sales are projected to be between flat and down 0.5%, a substantial narrowing from the previous range of flat to down 2%.The company now anticipates a gross margin of 29.8%-30% compared with the prior forecast of 29.7%-30%. Adjusted EBITDA is expected in the range of $225-$235 million versus the previous $220-$235 million projection.Grocery Outlet also raised its fiscal 2026 adjusted earnings-per-share guidance to 51-55 cents from 45-55 cents previously. The improved outlook follows sequential progress in Grocery Outlet’s comparable-store sales trajectory, with management pointing to a better customer basket and continued positive traffic. The company remains focused on strengthening its opportunistic assortment and value proposition while better supporting independent operators to establish a stronger foundation for sustainable, profitable long-term growth.Shares of Grocery Outlet have rallied 32.6% over the past three months compared with the industry’s rise of 5%. The Vita Coco Company, Inc. COCO, a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1 (Strong Buy). COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and earnings calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.Target Corporation TGT, which operates as a general merchandise retailer, carries a Zacks Rank #2 (Buy) at present.  TGT delivered a trailing four-quarter earnings surprise of 8.2%, on average.The Zacks Consensus Estimate for Target’s current financial-year sales and earnings indicates growth of 3.9% and 10.6%, respectively, from the prior-year reported levels.  US Foods Holding Corp. USFD engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. USFD currently carries a Zacks Rank #2. US Foods Holding delivered a trailing four-quarter earnings surprise of 1.5%, on average. The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings implies growth of 5.1% and 16.3%, respectively, from the year-ago figures. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report US Foods Holding Corp. (USFD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Grocery Outlet Holding Corp.? Here are five stocks we like better. Second-quarter results exceeded expectations: Net sales rose 1% to $1.19 billion, while comparable-store sales declined 0.3%, outperforming the company’s forecast. Traffic grew 1.8%, and adjusted EBITDA reached $65.7 million. Management is emphasizing opportunistic merchandise to improve the “Treasure Hunt” shopping experience; opportunistic sales and product mix both increased significantly, while promotional spending is expected to taper in the second half. Outlook remains tempered by a produce-related headwind: A Cyclospora outbreak is expected to reduce third-quarter comparable sales by roughly 100 basis points. Full-year guidance calls for comparable-store sales between down 0.5% and flat, adjusted EBITDA of $225 million to $235 million, and adjusted EPS of $0.50 to $0.55. AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be Grocery Outlet (NASDAQ:GO) reported second-quarter results that exceeded its outlook as the retailer said efforts to strengthen its opportunistic assortment, sharpen value messaging and improve store execution gained traction. Net sales rose 1% year over year to $1.19 billion for the quarter ended July 4, 2026. Comparable-store sales declined 0.3%, an improvement of 70 basis points from the first quarter and better than the company’s projected 1.5% to 2% decline. The result included an estimated 50-basis-point headwind from the timing of Easter, according to Chief Financial Officer Ian Ferry. → SoundHound AI Sends a Loud Signal After Its Q2 Earnings Beat AI Cold War Catches Light: Federal Friction in the Server Rack Traffic increased 1.8% during the quarter, while average basket size declined 2.1%. However, basket performance improved by roughly 100 basis points sequentially as shoppers responded to an expanded selection of opportunistic merchandise, President and Chief Executive Officer Jason Potter said. Gross profit was flat at $360.7 million, while gross margin declined 30 basis points from a year earlier to 30.2%. The margin nevertheless exceeded Grocery Outlet’s guidance range of 29.8% to 30%. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be 3 Stocks That Prove the AI Trade Isn't Over, It Moved The year-over-year margin decline reflected promotions introduced earlier this year to reinforce the company’s value positioning, as well as markdowns and write-offs related to store closures. Better inventory management partially offset those pressures. On a sequential basis, gross margin increased 60 basis points from the first quarter due to reduced liquidation activity, lower promotional spending and seasonal factors. SG&A expenses increased less than 1% to $339.5 million and held steady at 28.5% of sales. Grocery Outlet also recorded $5.4 million in net restructuring charges associated with its store optimization plan. → First Solar’s Profit Engine Faces a New Policy Test in Washington Net income was $5.6 million, or $0.06 per diluted share, compared with $5 million, or $0.05 per diluted share, a year earlier. Adjusted net income fell to $20.3 million, or $0.20 per diluted share, from $22.8 million, or $0.23 per diluted share, last year. Adjusted EBITDA was $65.7 million, or 5.5% of sales, compared with $67.7 million, or 5.7% of sales, in the prior-year quarter. Ferry said adjusted EBITDA and adjusted earnings per share both exceeded the company’s outlook. Grocery Outlet ended the quarter with $74 million in cash, approximately $154 million of revolver availability and $505.6 million of total debt, net of issuance costs. Net leverage was 1.8 times adjusted EBITDA. Management said its central objective remains returning the business to sustainable comparable-sales growth through a stronger opportunistic product offering, which supports the company’s “Treasure Hunt” shopping experience. Potter said opportunistic comparable sales improved by more than 500 basis points from the start of the first quarter through the second quarter, while opportunistic mix expanded by more than 300 basis points. Grocery, the company’s largest category, posted a 3.5% comparable-sales gain in the second quarter, he said. The retailer is applying the same approach to its deli and frozen categories, where it has expanded the range of branded opportunistic products. Grocery Outlet also discontinued 400 to 500 made-to-order and private-label items during the first half to create additional space for opportunistic variety, Potter said. Paul Miller returned to the company in June as executive vice president and chief purchasing and merchandising officer. Potter said Miller, a 25-year Grocery Outlet veteran, is helping strengthen sourcing and supplier relationships. New supplier acquisition is up about 11% this year, according to Potter. The company plans to reduce promotional spending during the second half as opportunistic product availability improves. Grocery Outlet continues to expect about $20 million in incremental promotional investment for the full year, but said that spending should taper further in the back half and be largely complete by the end of the third quarter. “The customer doesn’t really understand the distinction between a promoted branded item or op,” Ferry said. “They just see deals.” Grocery Outlet closed 36 underperforming stores in April as part of its store optimization plan. The company said it remains on track to eliminate a $12 million annualized adjusted EBITDA drag, with most of the benefit expected in 2027. During the second quarter, the company opened 10 stores and closed 12. For the full year, it expects 30 to 33 net new store openings. Management said its 2027 openings will be weighted toward infill markets as it prioritizes returns, site selection and first-year store productivity. The retailer remains on track to complete approximately 100 store refreshes by year-end, though Potter said the company has adjusted the program to shorten disruption periods after seeing more variability than desired in recent refresh cohorts. Grocery Outlet also highlighted investments in operator support, including store-level customer feedback reporting, expanded field coaching and a dynamic-routing program designed to improve delivery quantities and opportunistic-product flow. The routing program is currently in about 200 stores and is expected to be deployed across the broader fleet over the next year. Despite raising the low end of several full-year outlook ranges after its second-quarter outperformance, Grocery Outlet said a multi-state Cyclospora outbreak is weighing on produce sales. The company said none of its products were involved in recalls, but it expects the outbreak to reduce third-quarter total comparable sales by roughly 100 basis points and to create elevated produce shrink. For the third quarter, Grocery Outlet expects comparable-store sales of negative 1% to flat, gross margin of 29.8% to 30%, adjusted EBITDA of $58 million to $61 million, and adjusted diluted earnings per share of $0.14 to $0.16. For the full year, the company forecast net sales of $4.7 billion to $4.72 billion, comparable-store sales ranging from negative 0.5% to flat, adjusted EBITDA of $225 million to $235 million, and adjusted diluted EPS of $0.50 to $0.55. Capital expenditures, net of tenant improvement allowances, are expected to total $170 million. Potter said the company expects the Cyclospora-related impact to moderate in the fourth quarter and remains focused on restoring what management considers a healthier level of comparable sales over time. Grocery Outlet Holding Corp. (NASDAQ: GO) is a specialty discount retailer that offers consumers deeply discounted groceries by purchasing excess inventory, closeouts, and overstocks from manufacturers and distributors. Headquartered in Emeryville, California, the company operates two primary banners—Grocery Outlet and Fresh2Go—with a combined footprint of more than 400 stores. Its product assortment spans fresh produce, meat, dairy, bakery items, household staples, natural and organic offerings, and select specialty products, all sold at significant markdowns compared to conventional supermarkets. The company's unique buying model enables it to source inventory through opportunistic purchases of surplus freight, discontinued items, and closeout deals, which it then passes on as savings to its customers. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Grocery Outlet Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.