Grocery Outlet Surges After Discount Supermarket Beats Sales Estimates

Investors snapped up Grocery Outlet (GO) - Get Grocery Outlet Holding Corp. 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 Kroger Co. (KR) Report is eyeing plans to cut costs by eliminating the jobs of several middle managers at stores across the country, according to published reports.