Grocery Outlet Holding Corp. (GO, Financial) released its fourth quarter financial results on March 24 after the market closed. Both earnings and revenue topped Wall Street’s expectations as the company was able to meet excess demand arising from the Covid-19 outbreak.
By the numbers
Grocery Outlet posted adjusted earnings of 21 cents per share in the fourth quarter, up from 17 cents reported in the prior-year quarter. Revenue of $655.5 million surged 12% on a year-over-year basis. Analysts had predicted earnings of 17 cents per share on $655 million in revenue.
Comparable store sales jumped 5.1% in the reported quarter vs. a growth of 4.1% in the fourth quarter of fiscal 2018. CEO Eric Lindberg commented:
“During this unprecedented time, we are first and foremost focused on the health and safety of our corporate team, network of independent operators and their staff, our vendor partners and our customers. All parts of the business are coming together to serve our customers; we are leaning on our strong purchasing organization, long-standing vendor relationships, flexible supply chain, and the tireless efforts of our community of independent operators and their employees in order to keep store shelves stocked. We want to thank our employees and our IO’s (independent owners) for their continued contribution and service to their communities during this challenging period.”
Increasing debt
The supermarket company borrowed a sum of $90 million under the open-end credit facilty on March 19, 2020 as a preventative measure in consideration of the global uncertainty caused by the Covid-19 pandemic. This would also ensure liquidity for the company’s day-to-day operations.
Tackling accelerated demand
The Covid-19 outbreak led to a sudden rise in demand beginning in March, and the company did well to ensure that the demand was met. In a conference call, Lindberg commented:
“Due to our significantly higher customer demand, our buying organizations, supply chain teams and IOs are working around the clock to keep shelves stocked for our customers. Our purchasing team is intently focused on working with our vendor partners to replenish the high-demand products for our stores.”
Store count
During the quarter, the company launched 10 new stores. At the end of the quarter, the company has as many as 347 stores in the six states it operates (California, Oregon, Washington, Idaho, Nevada and Pennsylvania).
Guidance
Grocery Outlet did not issue any guidance for fiscal 2020, but mentioned it has a strong liquidity position and that it would keep investing in long term growth opportunities.
Disclosure: I do not hold any positions in the stocks mentioned.
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