8-K: Grocery Outlet Lowers FY25 Outlook on EBT Sales Decline

Grocery Outlet Holding Corp. updated its fourth quarter and full year fiscal 2025 outlook, citing a significant decline in EBT-related comparable store sales due to a U.S. government shutdown.

Summary

• Preliminary, unaudited comparable store sales for November 2025 from Electronic Benefits Transfer (EBT) payments declined by approximately 8.2%.
• Preliminary, unaudited comparable store sales for November 2025 from non-EBT transactions declined by approximately 0.5%.
• The U.S. government shutdown adversely impacted the disbursement of benefits from federally-funded assistance programs, which many customers depend on.
• For the fourth quarter of fiscal 2025, comparable store sales are now expected to be approximately flat.
• Diluted adjusted earnings per share for Q4 2025 are now expected to be at the low end of its previous forecast range of $0.21 to $0.23.
• For fiscal 2025, comparable store sales growth is now expected at the low end of the previously issued guidance range of 0.6% to 0.9%.
• Diluted adjusted earnings per share for fiscal 2025 are now expected to be at the low end of the previously issued guidance range of $0.78 to $0.80.
• The company will present at the Morgan Stanley Global Consumer & Retail Conference on December 3, 2025.

Sentiment

Score: 3

Explanation: The filing reports a significant decline in EBT-related sales and a downward revision of both Q4 and full-year comparable store sales and earnings per share guidance, indicating a negative short-term outlook due to external factors.

Positives

• The decline in non-EBT comparable store sales for November 2025 was relatively modest at approximately 0.5%.

Negatives

• Preliminary comparable store sales from EBT payments declined significantly by approximately 8.2% in November 2025.
• The company lowered its comparable store sales outlook for Q4 2025 to approximately flat.
• The company lowered its diluted adjusted earnings per share outlook for Q4 2025 to the low end of $0.21 to $0.23.
• The company lowered its comparable store sales growth outlook for fiscal 2025 to the low end of 0.6% to 0.9%.
• The company lowered its diluted adjusted earnings per share outlook for fiscal 2025 to the low end of $0.78 to $0.80.
• The U.S. government shutdown adversely impacted customer benefits, directly affecting sales.

Risks

• Reliance on federally-funded assistance programs, making sales vulnerable to government shutdowns or changes in benefit disbursement.
• Preliminary and unaudited financial information is subject to change upon completion of normal quarter-end accounting procedures.
• Operating in a very competitive and rapidly changing environment, with new risks emerging over time.
• Forward-looking statements are subject to risks, uncertainties, and assumptions that may cause actual results to differ materially.
• Variability and low visibility with respect to taxes and nonrecurring items can have an unpredictable and significant impact on future GAAP financial results.

Future Outlook

The company now expects comparable store sales for the fourth quarter of fiscal 2025 to be approximately flat, and diluted adjusted earnings per share to be at the low end of its previous forecast range of $0.21 to $0.23. For the full fiscal year 2025, comparable store sales growth is anticipated at the low end of 0.6% to 0.9%, with diluted adjusted earnings per share also at the low end of $0.78 to $0.80.

Management Comments

• Management noted that the U.S. government shutdown adversely impacted the disbursement of benefits from federally-funded assistance programs that many of our customers depend on.

Industry Context

The grocery retail sector, particularly discount retailers serving a broad customer base, can be significantly impacted by macroeconomic factors and government policy changes. The adverse effect of the U.S. government shutdown on federally-funded assistance programs highlights the vulnerability of retailers with a substantial portion of sales derived from such programs, potentially leading to short-term sales volatility across the industry for similar operators.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for direct performance comparison.
• Management uses non-GAAP financial measures like adjusted net income and diluted adjusted earnings per share to compare its performance against other peer companies using similar measures, but no specific benchmarks are detailed in this report.

Stakeholder Impact

• Shareholders: Likely negative impact on share price due to lowered financial guidance and increased uncertainty regarding sales performance.
• Customers: Those relying on federally-funded assistance programs were directly impacted by the government shutdown, affecting their purchasing power.
• Employees: Potential impact on store performance and operational targets due to reduced sales.
• Suppliers: Potential for reduced order volumes if sales trends persist.

Next Steps

• Present at the Morgan Stanley Global Consumer & Retail Conference on December 3, 2025.
• Complete normal quarter-end accounting procedures for preliminary sales results.

Key Dates

Recommendation

The downward revision of guidance is a direct consequence of an external, temporary event (government shutdown impacting EBT benefits) rather than a fundamental deterioration of the company's core business model or operational efficiency. While the short-term outlook is negatively impacted, the long-term value proposition may remain intact. Investors should hold to assess the recovery post-shutdown and the company's ability to mitigate such external shocks in the future.

Keywords

Grocery Outlet, GO, SEC Filing, 8-K, Financial Outlook, Sales Decline, EBT, SNAP, Government Shutdown, Retail, Grocery, Comparable Store Sales, Earnings Per Share, Guidance Update