Grocery Outlet Surges After Discount Supermarket Beats Sales Estimates

Rising sales at Grocery Outlet and other discount chains are pressuring traditional supermarkets, with Kroger eyeing plans to cut costs by eliminating the jobs of several middle managers.

Author:: Scott Van Voorhis
Publish date:: Oct 3, 2019 10:06 AM EDT

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Investors snapped up Grocery Outlet (GO) - Get Report shares on Thursday after the discount supermarket chain beat analyst revenue expectations in a preliminary fiscal-third-quarter report.

Grocery Outlet's stock rose 2.6% to $33.86 after the Emeryville, Calif., chain reported revenue jumped 13% in the quarter ended Sept. 29.

The grocery discounter's revenue tally of $652.5 million beat the $633.3 million estimate of analysts surveyed by FactSet.

While a significant piece of the sales growth came from eight new stores the chain opened during the quarter, Grocery Outlet also reported same-store-sales growth of 5.8%, nearly double the 3% expected by analysts polled by FactSet.

Meanwhile, Grocery Outlet estimated net income for the quarter came in at $8.9 million to $9.6 million.

At the midpoint of the estimate, the figures reflect a 21% increase from the year-earlier quarter, but came up short of the FactSet consensus number of $10.8 million.

Rising sales at Grocery Outlet and other discount chains are pressuring traditional supermarket chains. Overall, Grocery Outlet has opened 30 stores over the past year.

Kroger (KR) - Get Report is eyeing plans to cut costs by eliminating the jobs of several middle managers at stores across the country, according to published reports.