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Grocery Outlet plans to open up to 60 stores in 2024

Grocery Outlet Holding Corp. experienced year-over-year net sales growth of 6.3% to $989.8 million for the fourth quarter of 2023, the company reported Tuesday in its Q4 earnings report.

Gross margins were flat for the quarter at 30.2%, while comparable store sales ticked up 2.7% year over year, a move that was driven by a 7.5% increase in transactions, the company reported. Average transaction size was down, however, to 4.5%.

Grocery Outlet opened 13 new stores in Q4, ending the quarter and the year with 468 stores across nine states.

Meanwhile, net income was down 11.2% to 14.1 million year over year, and Adjusted EBITDA also dropped 6.3% to 50.9 million, compared to the same period last year. Adjusted net income was also down 19.6% to $18.2 million, the company reported.

“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 Outlets. “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.”

The report comes less than two weeks after the grocer announced plans to buy United Grocery Outlet, an extreme discount grocer with 40 stores in the Southeastern US and a distribution center in Tennessee.

“This acquisition will expand Grocery Outlet’s store reach into the new states of Tennessee, North Carolina, Georgia, Alabama, Kentucky, and Virginia,” the company said. “The transaction is expected to close early in the second quarter of fiscal 2024 and remains subject to customary closing conditions.”

“Our real estate pipeline is healthy, with approved sites for 2025 in good position to deliver our 10% annual growth goal,” said Sheedy during the earnings call. “Given this, most of our recent real estate efforts have been focused on building the 2026 pipeline. This will add to what is currently over 100 approved sites for 2025 and 2026 combined.”

For fiscal year 2024, Grocery Outlet plans to open 15 to 20 stores and reach net sales of $4.3 billion to $4.35 billion. Grocery Outlet also plans to achieve a comparable store sales increase of 3% to 4% and a gross margin of approximately 31.3%.

Adjusted EBITDA for 2024 is anticipated to be between $275 million and $283 million.