Shares of Grocery Outlet Holding Corp. (GO) surged as much as 9.89% on November 6, 2024, following the company's third-quarter earnings release, which showcased robust sales growth but also highlighted ongoing operational challenges.
The discount grocery chain reported a 10.4% year-over-year increase in net sales to $1.11 billion for the quarter, driven by the opening of new stores and a 1.2% rise in comparable store sales. Gross profit increased 9.2% to $344.9 million, with a gross margin rate of 31.1%, reflecting the continued resonance of the company's value proposition with consumers.
However, Grocery Outlet acknowledged facing significant disruptions due to its transition to a new SAP system, which impacted inventory visibility, operational efficiency, and the ability to execute its dynamic business model effectively. As a result, comparable store sales growth of 1.2% was weaker than expected, and the company revised its full-year adjusted EBITDA guidance downward by approximately $16 million to a range of $237 million to $242 million.
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