Grocery Outlet’s Q2 Earnings Beat, Comps Jump 2.9% Y/Y

Shares of Grocery Outlet Holding Corp. (NASDAQ: GO) advanced 11.9% during the after-market trading session on Aug 6 following second-quarter 2024 results. Both the top and bottom lines surpassed the Zacks Consensus Estimate. While net sales improved, earnings declined from the year-ago period. Management did highlight that disruptions due to the implementation of new technology platforms hurt the gross margin in the quarter, but it anticipates no adverse impacts on operations in the second half of 2024.

Q2 Insights

Grocery Outlet’s adjusted earnings of 25 cents a share beat the Zacks Consensus Estimate of 20 cents but declined from 32 cents delivered in the year-ago quarter.

Net sales of $1,128.5 million came ahead of the Zacks Consensus Estimate of $1,109 million. The top line grew 11.7% year over year. The outperformance was driven by decent comparable store sales performance and new stores opened.

Comparable store sales increased 2.9% in the quarter, driven by a 5.1% jump in the number of transactions, partly offset by a 2.1% decline in the average transaction size. We had anticipated 3.2% growth in the metric. In the year-ago period, the company had reported a comparable store sales increase of 9.2%.

Margins & Costs

The gross profit rose 6.9% year over year to $349.2 million. However, the gross margin contracted 140 basis points to 30.9% due to the …

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