Grocery Outlet reports its second-quarter 2026 results after the market closes today — and the numbers could reveal whether the struggling discount retailer is finally turning the corner or heading into another difficult period.
This is not a routine earnings announcement.
Grocery Outlet is coming into the results under pressure after a difficult start to the year. In the first quarter, sales increased 3.6% to about $1.17 billion, but the company recorded a huge goodwill impairment and announced plans to close 36 underperforming stores.
The retailer itself acknowledged that performance was not where it needed to be.
Now Wall Street is waiting to see whether the second quarter provides evidence of a recovery.
WHAT WE EXPECT
The current consensus points to second-quarter revenue of approximately $1.17 billion, slightly below the same period last year, with expected adjusted earnings of around 13 cents per share.
Our forecast is more cautious.
We expect revenue to come in around $1.15 billion to $1.18 billion, with comparable-store sales remaining under pressure.
The biggest number to watch may not be revenue.
It will be same-store sales and management’s comments about the 36 stores being closed.
THE DISCOUNT MODEL IS BEING TESTED
Grocery Outlet built its reputation on a simple proposition: customers can find branded and private-label products at significantly reduced prices.
That model should be attractive when consumers are worried about household budgets.
But the company is facing a new problem.
Traditional supermarkets have become much more aggressive on price.
Walmart, Aldi, Lidl and other value-focused retailers are competing heavily for price-conscious shoppers.
That means Grocery Outlet can no longer rely simply on being perceived as the cheap option.
It has to give shoppers a reason to visit its stores.
36 STORES ARE THE WARNING SIGN
The decision to close 36 stores is arguably the most important background to today’s announcement.
A retailer does not close dozens of locations because everything is going well.
The closures show that management is willing to sacrifice store count in an attempt to improve the quality of the remaining estate.
That could ultimately be positive.
But in the short term, it creates a difficult question:
How much sales growth is being lost while the company cleans up its store network?
OUR BIGGEST CONCERN: MARGINS
Revenue could remain relatively stable while profitability deteriorates.
That is the danger.
If Grocery Outlet is forced to use deeper discounts to attract shoppers, sales may hold up while margins come under additional pressure.
And if costs remain elevated, the company could find itself selling more but making less.
That would be a particularly bad outcome.
THE SURPRISE COULD COME FROM MANAGEMENT
The most interesting part of tonight’s announcement may actually come after the numbers.
Investors will want to know whether management is seeing improvement in customer traffic, basket size and comparable sales.
They will also want a clearer picture of what happens after the 36-store closures.
If management says the remaining stores are performing better and customer trends are improving, the market could view the restructuring as evidence that the turnaround is beginning.
If management cuts its outlook again, the reaction could be much harsher.
OUR FORECAST
ISN forecast: a mixed quarter, with revenue roughly flat to slightly down, continuing pressure on comparable-store sales and margins, but early signs that the store-closure programme could improve the business later in the year.
We do not expect today’s results to reveal a dramatic turnaround.
The more likely scenario is a company still in repair mode.
But there is one number that could change the story completely:
comparable-store sales.
If Grocery Outlet manages to show meaningful improvement there, investors may begin to believe that the discount chain has finally stabilised.
If not, today’s results could reinforce the view that the retailer’s problems are deeper than simply having too many underperforming stores.
Tonight’s announcement is therefore less about how much Grocery Outlet sold — and more about whether customers are coming back.