Why Grocery Outlet Stock Crashed Today
Key Points
Restructuring costs dented Grocery Outlet's fourth-quarter results.
The retailer is facing a host of macroeconomic challenges.
- 10 stocks we like better than Grocery Outlet ›
Shares of Grocery Outlet (NASDAQ: GO) plunged on Thursday after the discount grocery chain's quarterly results fell short of investors' expectations.
By the close of trading, Grocery Outlet's stock price was down more than 27%.
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Cash-strapped consumers are trying to reduce their expenses. Image source: Getty Images.
Sluggish sales
Grocery Outlet's net sales rose by 10.7% year over year to $1.22 billion in its fiscal 2025 fourth quarter, which ended on Jan. 3. However, much of the gains were due to an additional week of sales during the quarter compared to the year-ago period.
Comparable store sales decreased by 0.8% on a 13-week basis.
"Consumer pressure intensified, federally funded benefits were delayed, and competition grew more promotional," CEO Jason Potter said in a press release.
Grocery Outlet posted an operating loss of $234.8 million, driven by impairment charges related to store closures.
Restructuring plan
Looking ahead, management expects comparable store sales to decrease by as much as 2% in fiscal 2026. Grocery Outlet plans to close 36 stores to stem the declines. The company ended the fourth quarter with 570 locations.
"We're closing underperforming stores, reshaping our new store growth strategy, and reallocating resources to strengthen operating results and returns on capital," Potter said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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