Grocery Outlet announces $180M loss amid aggressive store optimization

Grocery Outlet (NASDAQ:GO) reported a first-quarter net loss of $180.3 million, or $1.83 per diluted share, compared with a net loss of $23.3 million in the same period last year.

The quarter’s results were primarily impacted by a $158 million non-cash goodwill impairment and $18.2 million in restructuring charges related to the company’s pivot toward a leaner retail footprint.

Net sales grew 3.6% to $1.17 billion, slightly exceeding analyst expectations.

However, comparable-store sales—a key metric for retail health—slipped by 1%.

Gross margin also faced pressure, falling 80 basis points to 29.6%.

Management attributed the margin compression to inventory markdowns and write-offs as the company begins liquidating products at 36 underperforming stores slated for closure.

While the closures will weigh on top-line growth in the short term, the company reaffirmed its full-year 2026 guidance, betting that shedding unprofitable locations will stabilize margins by 2027.

Adjusted net income, which strips out the impairment and restructuring costs, stood at $4.6 million for the quarter.