Big Changes Await Grocery Outlet, the ‘Treasure Hunt’ Supermarket

The discount food chain Grocery Outlet has entered a rebuilding phase.

The retailer, which maintains stores in Wenatchee and East Wenatchee, is noted for its forever-changing shelves - shopping there is tantamount to a treasure hunt.

But even swashbuckling pirates are fallible. On Tuesday, Grocery Outlet outlined a restructuring plan in its latest earnings report.

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Under the guidance of newly minted CEO Jason Potter, the company is shying away from store and warehouse expansions, focusing instead on priority markets. Potter hopes this strategy will improve execution and guest experience.

2024 was a bumpy year for Grocery Outlet, culminating in the abrupt resignation of previous CEO and president RJ Sheedy.

Despite a pronounced increase in net sales, the retailer's net income nearly halved. The company added about 70 stores and shuttered two.

The restructuring will cost north of $50 million (possibly as much as $61M). Workforce cuts are apparently imminent.

Chairman Eric Lindberg is quoted as telling Supermarket News,

We spent a lot of time looking at the best use of capital to optimize our distribution network and to support our growth, and have decided not to pursue an expansion into multi-temperature distribution, which would have added complexity and required a much higher level of capital investment.

 

We believe that we can simplify our regional supply-chain strategy to drive operational efficiencies, improve inventory management and support our growth in a more capital-efficient way.

As for those dreaded layoffs, though painful, the cuts are necessary to optimize capital and improve scale, according to Lindberg, who briefly took the reins last year as interim CEO:

As we took a long, hard look at these areas over the last three months, it was clear that these were necessary steps to building a stronger foundation from which to scale in the future.