Grocery Outlet Holding Corp.’s (GO Quick QuoteGO - Free Report) strategic initiatives and strong product offerings have been contributing to its success.

The company’s customer-centric approach, unique business model and commitment to providing exceptional values continue to drive customer excitement and loyalty. As it expands its store footprint and embraces technology, it remains a go-to destination for bargain-minded shoppers seeking quality name-brand products at unbeatable prices.

These upsides have been helping this high-growth, extreme-value retailer navigate through a challenging operating environment with remarkable resilience. Notably, the Zacks Rank #2 (Buy) stock has rallied 15% in the past three months against the industry’s decline of 4.4%. GO has also outpaced the Consumer Staples sector’s dip of 0.3%.

The Zacks Consensus Estimate for the company’s 2023 and 2024 sales is pegged at $3.91 billion and $4.27 billion, respectively, suggesting a year-over-year increase of 9.3% for both periods.

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Let’s Delve Deeper

Grocery Outlet's flexible sourcing and distribution model set it apart from conventional retailers. The company's ability to purchase merchandise at substantial discounts from order cancellations, manufacturer overruns, packaging changes and nearing "sell-by" dates enables it to offer exceptional values to customers.

The ever-changing product selection, including opportunistic "WOW!" deals, keeps customers intrigued. These deals, sourced opportunistically at considerable discounts, allow Grocery Outlet to offer quality, name-brand consumables and fresh products at prices approximately 40% below conventional grocers and 20% below leading discounters.

Recognizing the significance of e-commerce, Grocery Outlet has embraced technology and partnerships. It offers same-day delivery of everyday essentials and staples through collaborations with Instacart, DoorDash and Uber Technologies for grocery delivery. Furthermore, a mobile app has been tested in Washington State, enabling customers to view real-time trending items in stores and access curated product recommendations based on their preferences.

Recognizing the growing consumer demand for fresh and healthy options, Grocery Outlet has shifted its focus to Natural, Organic, Specialty, and Healthy products. This strategic shift not only broadens Grocery Outlet's customer base but also aligns with the growing demand for conscious and sustainable purchasing choices.

The company’s commitment to personalized customer service, courtesy of Entrepreneurial Independent Operators, creates a neighborhood-like shopping experience. Grocery Outlet is experiencing positive store growth, especially in developing markets. It is on track to open 25-28 net new stores this year, and is investing in real estate and construction resources to support this growth and expansion into new markets.

The company is actively engaging with new brokers and landlords, and keeping an eye on opportunities to secure real estate that becomes available from other retailers, which suggests a strategic approach to expanding their store footprint.

Stock Keeping Unit (SKU) expansion is a regular part of Grocery Outlet's ongoing business, which refers to the process of increasing the number of unique SKUs in a product assortment or inventory. Each SKU represents a distinct item with its attributes, such as size, color, or variant. In the first quarter of 2023, approximately 150 SKUs were added, whereas around 700 SKUs were added last year. This expansion may impact the timeline for developing private label offerings, ensuring a strategic alignment of new products with the private label strategy.

Wrapping Up

These strategies have translated into a favorable financial performance for Grocery Outlet. In the first quarter of 2023, the company exceeded expectations, with its top and bottom-line figures seeing year-over-year growth. The solid comparable store sales performance in the quarter reflects the strength of Grocery Outlet's existing store network, and its ability to drive customer traffic and sales. (Read More: Grocery Outlet Beats on Q1 Earnings, Raises FY23 View)

Following these positive results, management raised its 2023 view at its first-quarter earnings release, projecting net sales of $3.90 billion, accompanied by comparable store sales growth of 5-6%. The company earlier projected 2023 net sales between $3.85 billion and $3.90 billion, and comparable store sales between 4.5% and 5.5%.

3 Other Promising Staple Stocks

Here we have highlighted three other top-ranked stocks, namely Associated British Foods (ASBFY Quick QuoteASBFY - Free Report) , Celsius Holdings (CELH Quick QuoteCELH - Free Report) and Walmart (WMT Quick QuoteWMT - Free Report) .

Associated British Foods is a diversified international food, ingredients and retail group, which currently sports a Zacks Rank #1 (Strong Buy). ASBFY’s expected EPS growth rate for three to five years is 7%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Associated British Foods’ current financial-year sales and earnings suggests growth of 30.4% and 4.2%, respectively, from the year-ago reported figures.

Celsius Holdings, which offers functional drinks and liquid supplements, currently has a Zacks Rank #2. CELH delivered an earnings surprise of 81.8% in the last reported quarter.

The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings suggests growth of 69.6% and 154.4%, respectively, from the year-ago reported numbers.

Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.

The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.