Grocery Outlet BB #:154673 didn’t disappoint in its first earnings report following since going public this summer. The Emeryville, CA-based retailer posted 12.2% top line year-over-year growth, with a 5.8% increase in same-store sales.
But that wasn’t really surprising for the company said CEO Eric Lindberg, during the company’s earnings call held Aug. 13.
“We have achieved 15 consecutive years of positive comps delivering steady sales growth and consistent growth margins throughout economic and inflationary cycles,” Lindberg said.
Lindberg said the company’s “treasure hunt” model and value-conscious target demographics bring a strong customer base primed for growth.
“We see tremendous white space in front of us and plan to grow our store base at 10% annually, with a healthy balance of openings across mature markets where we have high levels of brand recognition, and developing markets where we are building brand awareness,” he said.
The “treasure hunt” is supported with a buying strategy most chains don’t utilize, said company president R.J. Sheedy, during the call. Opportunistic buying represents about half of a store’s assortment.
“We referred to our best opportunistic purchases as WOW! deals,” he said. “These items deliver extreme value and an everchanging treasure hunt experience, which drive frequent visits and bigger baskets as customers look to stock-up on these exciting items before they sell out.”
The company also focuses marketing on digital channels, “which allow us to dynamically deliver our most exciting local deals to consumers when they arrive in stores,” he said.
The company’s stock has risen steadily since it went public in June, from $28.51 per share to $39.50 per share at the close of trading on Aug. 14. At the time the company said it planned to expand steadily over the next several years, and company executives reiterated those plans during the report.
“We plan to continue to grow our store base at approximately 10% annually and see the potential to open 400 additional stores in existing states and 1,600 stores in neighborhood states,” said vice chairman MacGregor Read, during the call.
Reed said stores range in size from 15,000 to 20,000 square feet, targeting convenient, highly-visible locations.
The company also employs an independent operator strategy wherein store owners share 50/50 in gross profits, Lindberg said.
“We love the enthusiasm of the independent operators, which is reflected in their initiative and creativity as well as their sharing of best practices with one another,” he said.