We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Grocery Outlet (GO) Q2 Earnings Beat, FY23 Outlook Raised
Read MoreHide Full Article
Grocery Outlet Holding Corp. (GO - Free Report) reported second-quarter 2023 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and also improved year over year. The company registered a solid comparable store sales performance in the quarter. Following the results, management raised its full-year view.
This California-based company continues to navigate through the challenging operating environment with strategic growth efforts. Grocery Outlet’s flexible sourcing and distribution business model, which helps it offer products at an exceptional value and excellent service from independent operators, bodes well.
The company’s opportunistic purchasing strategy, marketing efforts, store-growth endeavors and e-commerce initiatives to deepen customer reach appear encouraging.
Q2 Insights
GO reported adjusted earnings of 32 cents per share, which comfortably surpassed the Zacks Consensus Estimate of 26 cents. The bottom line also increased from 27 cents delivered in the year-ago quarter.
Net sales of $1,010.3 million beat the Zacks Consensus Estimate of $975 million. The top line grew 12.5% year over year. The outperformance was driven by stellar comparable store sales performance and gross margin expansion.
Comparable store sales increased 9.2% in the second quarter, faring better than our estimate of 5% growth. The metric jumped 11.2% in the year-ago period. In the reported quarter, the increase in the metric was driven by a 9.1% growth in the number of transactions, while the average transaction size was stable.
Grocery Outlet Holding Corp. Price, Consensus and EPS Surprise
The gross profit jumped 16.9% year over year to $326.6 million. The gross margin expanded 120 basis points to 32.3%. We had expected a gross margin of 30.7% in the quarter under review. Adjusted EBITDA came in at $70.5 million compared with $57.5 million in the year-ago period. We note that the adjusted EBITDA margin expanded 60 basis points to 7% compared with our estimate of 6.3%.
SG&A expenses jumped 14.9% to $290.1 million due to increased independent operator commission expenses and store occupancy costs. As a percentage of net sales, SG&A expenses expanded 60 basis points to 28.7% due to increased variable commission expenses. Our estimate for SG&A expenses, as a percentage of net sales, was 27.8% for the quarter.
Store Update
During the quarter, Grocery Outlet opened four new stores and closed one store, bringing the total count to 447 stores in eight states. In the third quarter, the company plans to open eight stores, with balance openings in the fourth quarter. It intends to open 25 to 28 stores in 2023.
Other Financial Aspects
Grocery Outlet, which carries a Zacks Rank #3 (Hold), ended the quarter with cash and cash equivalents of $87.6 million, long-term debt of $290.7 million and stockholders’ equity of $1,164.8 million.
Net cash provided by operating activities during the second quarter was $69.5 million. The company incurred capital expenditures of $35.4 million (net of tenant improvement allowances). Management envisions capital expenditures (net of tenant improvement allowances) of about $155 million for 2023, which is in line with our estimate.
Outlook
Management now expects 2023 net sales of $3.95 billion compared with $3.58 billion in 2022. It currently expects comparable store sales growth of 7% to 8% compared with an 11.8% increase registered in 2022.
Grocery Outlet had earlier projected 2023 net sales of $3.90 billion and comparable store sales growth of 5% to 6%.
The company guided a full-year gross margin of 31.3% compared with 30.5% reported in 2022. It projected adjusted EBITDA between $254 million and $260 million in 2023. Grocery Outlet reported adjusted EBITDA of $214.7 million in 2022.
The company had previously expected a full-year gross margin of 30.7% and adjusted EBITDA between $240 million and $246 million.
Grocery Outlet now envisions adjusted earnings in the band of $1.04-$1.08 per share for 2023 compared with the 94 cents reported in 2022. It had earlier guided adjusted earnings in the range of 96 cents-$1.00 per share for 2023.
Management expects third-quarter 2023 comparable store sales to be approximately 6.5% compared with 15.4% growth registered in the year-ago period. Grocery Outlet foresees third-quarter 2023 gross margin to be approximately 31.3% compared with 30.6% reported in the year-ago period. The company estimates third-quarter adjusted EBITDA to be roughly 6.4% of sales.
Shares of this extreme-value retailer of quality, name-brand consumables and fresh products have risen 10.2% in the past three months against the industry’s decline of 8.6%.
Stocks Hogging in the Limelight
Here we have highlighted three better-ranked stocks, namely Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) and Bath & Body Works, Inc. (BBWI - Free Report) .
PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS indicates a rise of 17% and 29%, respectively, from the year-ago period’s levels.
BJ's Restaurants sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 121.2%, on average. The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.6% and 405.9% growth, respectively, from the year-ago period’s levels.
Bath & Body Works carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 44.6%, on average. The Zacks Consensus Estimate for BBWI’s current fiscal year sales and EPS indicate a decline of 1.3% and 12.9%, respectively, from the year-ago period’s levels.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Grocery Outlet (GO) Q2 Earnings Beat, FY23 Outlook Raised
Grocery Outlet Holding Corp. (GO - Free Report) reported second-quarter 2023 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and also improved year over year. The company registered a solid comparable store sales performance in the quarter. Following the results, management raised its full-year view.
This California-based company continues to navigate through the challenging operating environment with strategic growth efforts. Grocery Outlet’s flexible sourcing and distribution business model, which helps it offer products at an exceptional value and excellent service from independent operators, bodes well.
The company’s opportunistic purchasing strategy, marketing efforts, store-growth endeavors and e-commerce initiatives to deepen customer reach appear encouraging.
Q2 Insights
GO reported adjusted earnings of 32 cents per share, which comfortably surpassed the Zacks Consensus Estimate of 26 cents. The bottom line also increased from 27 cents delivered in the year-ago quarter.
Net sales of $1,010.3 million beat the Zacks Consensus Estimate of $975 million. The top line grew 12.5% year over year. The outperformance was driven by stellar comparable store sales performance and gross margin expansion.
Comparable store sales increased 9.2% in the second quarter, faring better than our estimate of 5% growth. The metric jumped 11.2% in the year-ago period. In the reported quarter, the increase in the metric was driven by a 9.1% growth in the number of transactions, while the average transaction size was stable.
Grocery Outlet Holding Corp. Price, Consensus and EPS Surprise
Grocery Outlet Holding Corp. price-consensus-eps-surprise-chart | Grocery Outlet Holding Corp. Quote
Margins & Costs
The gross profit jumped 16.9% year over year to $326.6 million. The gross margin expanded 120 basis points to 32.3%. We had expected a gross margin of 30.7% in the quarter under review. Adjusted EBITDA came in at $70.5 million compared with $57.5 million in the year-ago period. We note that the adjusted EBITDA margin expanded 60 basis points to 7% compared with our estimate of 6.3%.
SG&A expenses jumped 14.9% to $290.1 million due to increased independent operator commission expenses and store occupancy costs. As a percentage of net sales, SG&A expenses expanded 60 basis points to 28.7% due to increased variable commission expenses. Our estimate for SG&A expenses, as a percentage of net sales, was 27.8% for the quarter.
Store Update
During the quarter, Grocery Outlet opened four new stores and closed one store, bringing the total count to 447 stores in eight states. In the third quarter, the company plans to open eight stores, with balance openings in the fourth quarter. It intends to open 25 to 28 stores in 2023.
Other Financial Aspects
Grocery Outlet, which carries a Zacks Rank #3 (Hold), ended the quarter with cash and cash equivalents of $87.6 million, long-term debt of $290.7 million and stockholders’ equity of $1,164.8 million.
Net cash provided by operating activities during the second quarter was $69.5 million. The company incurred capital expenditures of $35.4 million (net of tenant improvement allowances). Management envisions capital expenditures (net of tenant improvement allowances) of about $155 million for 2023, which is in line with our estimate.
Outlook
Management now expects 2023 net sales of $3.95 billion compared with $3.58 billion in 2022. It currently expects comparable store sales growth of 7% to 8% compared with an 11.8% increase registered in 2022.
Grocery Outlet had earlier projected 2023 net sales of $3.90 billion and comparable store sales growth of 5% to 6%.
The company guided a full-year gross margin of 31.3% compared with 30.5% reported in 2022. It projected adjusted EBITDA between $254 million and $260 million in 2023. Grocery Outlet reported adjusted EBITDA of $214.7 million in 2022.
The company had previously expected a full-year gross margin of 30.7% and adjusted EBITDA between $240 million and $246 million.
Grocery Outlet now envisions adjusted earnings in the band of $1.04-$1.08 per share for 2023 compared with the 94 cents reported in 2022. It had earlier guided adjusted earnings in the range of 96 cents-$1.00 per share for 2023.
Management expects third-quarter 2023 comparable store sales to be approximately 6.5% compared with 15.4% growth registered in the year-ago period. Grocery Outlet foresees third-quarter 2023 gross margin to be approximately 31.3% compared with 30.6% reported in the year-ago period. The company estimates third-quarter adjusted EBITDA to be roughly 6.4% of sales.
Shares of this extreme-value retailer of quality, name-brand consumables and fresh products have risen 10.2% in the past three months against the industry’s decline of 8.6%.
Stocks Hogging in the Limelight
Here we have highlighted three better-ranked stocks, namely Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) and Bath & Body Works, Inc. (BBWI - Free Report) .
Dave & Buster's Entertainment (PLAY - Free Report) sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS indicates a rise of 17% and 29%, respectively, from the year-ago period’s levels.
BJ's Restaurants sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 121.2%, on average. The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.6% and 405.9% growth, respectively, from the year-ago period’s levels.
Bath & Body Works carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 44.6%, on average. The Zacks Consensus Estimate for BBWI’s current fiscal year sales and EPS indicate a decline of 1.3% and 12.9%, respectively, from the year-ago period’s levels.