Grocery Outlet Keeps Sales Surge Alive
Grocery Outlet says its flexible distribution business model helped the grocer attract more pandemic shoppers and increase same-store sales and earnings during the fourth quarter.
The Emeryville, Calif.-based discounter said same-store sales increased 7.9% during the period ended Jan. 2; the retailer had a 5% increase during the same period last year. Net sales increased by 23.1% to $806.8 million, which includes $53.3 million from the 53rd week. Adjusted net income increased 46.1% to $24.2 million, or 24 cents per non-GAAP diluted share. Adjusted EBITDA increased 24.7% to $51.2 million.
"Reflecting on 2020, our flexible business model, supported by many years of strategic investments, positioned us to deliver exceptional financial results in an unprecedented environment," Eric Lindberg, CEO of Grocery Outlet, said. "I am extremely proud of the commitment demonstrated by our organization as we rose to meet the challenges created by the COVID pandemic."
Unlike many other food retailers, the company provided a forecast for the first quarter, and it wasn't good. The company said it anticipates that same-store sales for the first quarter will decline in the negative high-single digits reflecting the impact of cycling the initial demand surge related to the COVID-19 pandemic in March 2020.
"On the heels of an extraordinary year, we will continue to focus on making strategic, disciplined investments to support our growth. We believe that our value proposition is as strong as ever, we have ample white space to execute 10% annual unit growth and we remain committed to continuously reinvesting in the business, all of which position us to achieve our long-term growth objectives," Lindberg added.
The company opened eight new stores ending the quarter with 380 stores in six states. Grocery Outlet is currently focused on expanding through the East Coast, where it expects to open approximately three to five stores this year. There are currently 19 Pennsylvania locations including Coatesville, Chester County; Sharon Hill, Delaware County; Muhlenberg and Shillington, Berks County and the East Norriton, Montgomery County.
For the full year, net sales at Grocery Outlet increased by 22.5% to $3.13 billion. Same-store sales increased by 12.7% on a 52-week basis compared to a 5.2% increase in the comparable period last year. Adjusted net income increased 86.9% to $112.7 million, or $1.14 per non-GAAP diluted share. Adjusted EBITDA increased 32.4% to $222.9 million.
Total debt was $449.2 million at the end of the fourth quarter of fiscal 2020. Net cash provided by operations during fiscal 2020 was $181.2 million. Capital expenditures for the fourth quarter of fiscal 2020, excluding the impact of tenant improvement allowances, were $39.1 million.
The company opened 35 new stores and closed two stores during the year. The company currently expects to open between 36 and 38 stores this year with one closure.
Based in Emeryville, California, Grocery Outlet has more than 300 stores in California, Washington, Oregon, Pennsylvania, Idaho and Nevada. The company is No. 66 on The PG 100, Progressive Grocer’s list of the top food and consumables retailers in North America.
