Potter said he kicked off the quarter with a tour of more than 50 stores and dozens of the chain’s suppliers. Shutterstock

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Grocery Outlet is making headway in its restructuring laid out in the fourth quarter, opening a net 10 new stores in Q1 and achieving nearly a third of its plan for 33 to 35 new locations by the end of the year. 

The grocery chain ended the first quarter with 543 stores across 16 states.

Newly appointed CEO, Jason Potter, who previously served as CEO of The Fresh Market and joined Grocery Outlet in late January, said the grocery retailer also delivered on its first quarter outlook for its established stores with comparable store sales up 0.3% from 2024.

“These stores are off to a solid start, performing ahead of expectations. We also exceed our gross margin outlook by improving our shrink run rate through improved inventory, visibility, reporting, and execution,” he said. 

Potter said he kicked off the quarter with a tour of more than 50 stores and dozens of the chain’s suppliers. 

“I've listened, gained valuable and candid feedback and learned more about what matters to all of them,” he said in the earnings call on Tuesday. 

Potter said he remains “bullish” on the grocery retailer’s ability to improve costs and margin while growing. 

“As I've said, I believe with the right focus and execution, this business can be much larger and much more profitable in the future. Achieving our potential, however, requires that focused execution,” he said.

He said the company has set four strategic imperatives to achieve its goals:

Tackling new store performance to drive long-term growth and strengthen returns on invested capital Securing top talent to activate the strategy Addressing execution gaps by continuing to make progress on systems to improve performance Improving the ability to execute at scale by strengthening leadership, opportunistic buying, and becoming a leading selling organization that delivers a winning customer experience

The turnaround effort follows a difficult period for Grocery Outlet over the last year.

“2024 was a year in which many critical operational elements were out of sync, which was further exacerbated by trying to do too much, too fast. But we're working urgently to get back on track,” Grocery Outlet Chairman Eric Lindberg said in February. 

Grocery Outlet reported that net sales rose 8.5% year over year for the quarter. Meanwhile, gross margin improved to 30.4% from 29.3% the previous year. 

Adjusted net income reached $13 million, or $0.13 per diluted adjusted share, up from $8.8 million, or $0.09 per diluted adjusted share, last year. 

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Adjusted EBITDA increased by 31.7% to $51.9 million, representing 4.6% of net sales. 

Grocery Outlet also announced the departures of Ramesh Chikkala, EVP, chief operations officer, who is retiring this June, and Pamela Burke, EVP, chief stores officer, who will retire later this year. 

“Pam has led a number of functions and forged strong relationships with our IOs during her decade with the company. Ramesh has helped stabilize and build leadership teams to drive systems improvements, while also strengthening our supply chain,” Potter said.

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