Grocery Outlet’s Growth Plan: 60 New Stores by 2024

A week after Grocery Outlet announced the acquisition of United Grocery Outlet and its 40 stores operating in the southeastern U.S., the company said that in 2024, it plans to open 60 stores.

Currently, Grocery Outlet operates 468 stores in nine states.

The discount retailer revealed its growth plans during the presentation of its fourth quarter and fiscal 2023 financial results.

Highlights of Grocery Outlet’s fiscal 2023 fourth quarter compared to fiscal 2022 fourth quarter:

  • Net sales increased by 6.3% to $989.8 million.
  • Comparable store sales increased by 2.7%, driven by a 7.5% increase in the number of transactions, partially offset by a 4.5% decrease in average transaction size.
  • Gross margin remained flat at 30.2%.
  • As previously disclosed, the company experienced disruptions due to the implementation of new technology platforms in late August 2023. Such disruptions are estimated to have negatively impacted comparable store sales by approximately 200 basis points and gross margin by 130 basis points in the fourth quarter.
  • The company opened 13 new stores, ending the quarter with 468 stores in nine states.
  • Net income decreased 11.2% to $14.1 million, or $0.14 per diluted share.
  • Adjusted EBITDA decreased 6.3% to $50.9 million, or 5.1% of net sales.
  • Adjusted net income decreased 19.6% to $18.2 million, or $0.18 per adjusted diluted share(1).

Related Article: Food Price Outlook Improves in 2024

“Our value proposition continues to resonate with consumers, resulting in strong traffic and transaction count growth. During 2023, we increased our market share, achieved record sales of $4 billion, and grew Adjusted EBITDA by 18%,” said RJ Sheedy, CEO of Grocery Outlet. 

“Looking ahead, we are excited to be acquiring United Grocery Outlet and the platform that it will provide to support future store growth in the Southeast,” Sheedy noted.

This acquisition will expand Grocery Outlet’s store footprint in Tennessee, North Carolina, Georgia, Alabama, Kentucky, and Virginia. The transaction is expected to close early in the second quarter of fiscal 2024, said the grocery retailer.

Likewise, the company provided the following forecast for fiscal 2024, assuming the acquisition of United Grocery Outlet early in the second quarter of fiscal 2024:

  • New store openings, net: 55 to 60.
  • Net sales: $4.3 billion to $4.35 billion.
  • Comparable store sales growth: 3.0% to 4.0%.
  • Gross margin: ~31.3%.
  • Adjusted EBITDA: $275 million to $283 million.
  • Adjusted earnings per share – diluted: $1.14 to $1.20.
  • Capital expenditures (net of provisions for premises improvements): ~$170 million.