Cover
Cover - shares | 3 Months Ended | |
Mar. 30, 2024 | May 02, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 30, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-38950 | |
Entity Registrant Name | Grocery Outlet Holding Corp. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-1874201 | |
Entity Address, Address Line One | 5650 Hollis Street | |
Entity Address, City or Town | Emeryville | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94608 | |
City Area Code | 510 | |
Local Phone Number | 845-1999 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | GO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 99,861,691 | |
Entity Central Index Key | 0001771515 | |
Current Fiscal Year End Date | --12-28 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 66,885 | $ 114,987 |
Independent operator receivables and current portion of independent operator notes, net of allowance $4,744 and $5,092 | 13,347 | 14,943 |
Other accounts receivable, net of allowance $32 and $2 | 5,484 | 4,185 |
Merchandise inventories | 362,730 | 349,993 |
Prepaid expenses and other current assets | 29,954 | 32,443 |
Total current assets | 478,400 | 516,551 |
Independent operator notes and receivables, net of allowance $11,263 and $11,059 | 28,236 | 28,134 |
Property and equipment, net | 680,614 | 642,462 |
Operating lease right-of-use assets | 949,065 | 945,710 |
Intangible assets, net | 80,189 | 78,556 |
Goodwill | 747,943 | 747,943 |
Other assets | 10,084 | 10,230 |
Total assets | 2,974,531 | 2,969,586 |
Current liabilities: | ||
Trade accounts payable | 223,710 | 209,354 |
Accrued and other current liabilities | 63,064 | 66,655 |
Accrued compensation | 11,389 | 24,749 |
Current portion of long-term debt | 5,625 | 5,625 |
Current lease liabilities | 63,932 | 63,774 |
Income and other taxes payable | 14,340 | 13,808 |
Total current liabilities | 382,060 | 383,965 |
Long-term debt, net | 285,331 | 287,107 |
Deferred income tax liabilities, net | 36,909 | 38,601 |
Long-term lease liabilities | 1,043,715 | 1,038,307 |
Other long-term liabilities | 1,943 | 2,267 |
Total liabilities | 1,749,958 | 1,750,247 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity: | ||
Common stock, par value $0.001 per share, 500,000,000 shares authorized; 100,147,065 and 99,223,863 shares issued and outstanding, respectively | 100 | 99 |
Series A preferred stock, par value $0.001 per share, 50,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Additional paid-in capital | 883,534 | 877,276 |
Retained earnings | 340,939 | 341,964 |
Total stockholders' equity | 1,224,573 | 1,219,339 |
Total liabilities and stockholders' equity | $ 2,974,531 | $ 2,969,586 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Statement of Financial Position [Abstract] | ||
Accounts and financing receivable, allowance for credit loss, current | $ 4,744 | $ 5,092 |
Allowance for doubtful other receivables, current | 32 | 2 |
Accounts and financing receivable, allowance for credit loss, noncurrent | $ 11,263 | $ 11,059 |
Common stock, par (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, issued (in shares) | 100,147,065 | 99,223,863 |
Common stock, outstanding (in shares) | 100,147,065 | 99,223,863 |
Preferred stock, par (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Net sales | $ 1,036,944 | $ 965,467 |
Cost of sales | 732,999 | 664,924 |
Gross profit | 303,945 | 300,543 |
Selling, general and administrative expenses | 303,382 | 267,725 |
Operating income | 563 | 32,818 |
Other expenses: | ||
Interest expense, net | 3,176 | 5,919 |
Loss on debt extinguishment and modification | 0 | 5,340 |
Total other expenses | 3,176 | 11,259 |
Income (loss) before income taxes | (2,613) | 21,559 |
Income tax expense (benefit) | (1,588) | 7,839 |
Net income (loss) and comprehensive income (loss) | (1,025) | 13,720 |
Comprehensive income | $ (1,025) | $ 13,720 |
Basic earnings per share (in usd per share) | $ (0.01) | $ 0.14 |
Diluted earnings per share (in usd per share) | $ (0.01) | $ 0.14 |
Weighted average shares outstanding: | ||
Basic (in shares) | 99,520 | 97,920 |
Diluted (in shares) | 99,520 | 100,569 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2022 | 97,674,356 | |||
Beginning balance at Dec. 31, 2022 | $ 1,110,214 | $ 98 | $ 847,589 | $ 262,527 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Exercise and vesting of share-based awards (in shares) | 734,310 | |||
Exercise and vesting of share-based awards | 204 | 204 | ||
Share-based compensation expense | 6,676 | 6,676 | ||
Repurchase of common stock (in shares) | (122,862) | |||
Repurchase of common stock | (3,275) | (3,275) | ||
Net (loss) income | 13,720 | 13,720 | ||
Comprehensive (loss) income | 13,720 | 13,720 | ||
Ending balance (in shares) at Apr. 01, 2023 | 98,285,804 | |||
Ending balance at Apr. 01, 2023 | $ 1,127,539 | $ 98 | 851,194 | 276,247 |
Beginning balance (in shares) at Dec. 30, 2023 | 99,223,863 | 99,223,863 | ||
Beginning balance at Dec. 30, 2023 | $ 1,219,339 | $ 99 | 877,276 | 341,964 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Exercise and vesting of share-based awards (in shares) | 1,124,005 | |||
Exercise and vesting of share-based awards | 3,442 | $ 1 | 3,441 | |
Share-based compensation expense | 8,142 | 8,142 | ||
Repurchase of common stock (in shares) | (200,803) | |||
Repurchase of common stock | (5,325) | (5,325) | ||
Net (loss) income | (1,025) | (1,025) | ||
Comprehensive (loss) income | $ (1,025) | (1,025) | ||
Ending balance (in shares) at Mar. 30, 2024 | 100,147,065 | 100,147,065 | ||
Ending balance at Mar. 30, 2024 | $ 1,224,573 | $ 100 | $ 883,534 | $ 340,939 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (1,025) | $ 13,720 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation of property and equipment | 20,955 | 18,309 |
Amortization of intangible and other assets | 3,934 | 2,366 |
Amortization of debt issuance costs and debt discounts | 228 | 401 |
Non-cash rent | 922 | 1,144 |
Loss on debt extinguishment and modification | 0 | 5,340 |
Share-based compensation | 8,142 | 6,676 |
Provision for independent operator and other accounts receivable reserves | 583 | 1,369 |
Deferred income taxes | (1,692) | 6,130 |
Other | 364 | 105 |
Changes in operating assets and liabilities: | ||
Independent operator and other accounts receivable | 1,241 | (2,008) |
Merchandise inventories | (12,737) | 17,922 |
Prepaid expenses and other assets | 2,305 | (397) |
Income and other taxes payable | 532 | 1,217 |
Trade accounts payable, accrued compensation and other liabilities | (17,432) | 11,343 |
Operating lease liabilities | 1,521 | 3,995 |
Net cash provided by operating activities | 7,841 | 87,632 |
Cash flows from investing activities: | ||
Advances to independent operators | (3,132) | (1,547) |
Repayments of advances from independent operators | 1,503 | 2,010 |
Purchases of property and equipment | (46,266) | (32,894) |
Proceeds from sales of assets | 0 | 20 |
Investments in intangible assets and licenses | (2,992) | (7,936) |
Net cash used in investing activities | (50,887) | (40,347) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 3,442 | 204 |
Proceeds from senior term loan due 2028 | 0 | 300,000 |
Proceeds from revolving credit facility | 0 | 25,000 |
Principal payments on finance leases | (382) | (320) |
Repurchase of common stock | (6,241) | (3,275) |
Debt issuance costs paid | 0 | (4,507) |
Net cash used in financing activities | (5,056) | (67,898) |
Net decrease in cash and cash equivalents | (48,102) | (20,613) |
Cash and cash equivalents at beginning of period | 114,987 | 102,728 |
Cash and cash equivalents at end of period | 66,885 | 82,115 |
Senior Term Loan Due 2025 | ||
Cash flows from financing activities: | ||
Principal payments on senior term loan | 0 | (385,000) |
Senior term loan due 2028 | ||
Cash flows from financing activities: | ||
Principal payments on senior term loan | $ (1,875) | $ 0 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Account Policies | Organization and Summary of Significant Accounting Policies Description of Business — Based in Emeryville, California, and incorporated in Delaware in 2014, Grocery Outlet Holding Corp. (together with its wholly owned subsidiary, collectively, "Grocery Outlet," "we," or the "Company") is a high-growth, extreme value retailer of quality, name-brand consumables and fresh products sold through a network of independently operated stores. As of March 30, 2024, we had 474 stores throughout California, Washington, Oregon, Pennsylvania, Idaho, Nevada, Maryland, New Jersey and Ohio. Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the United States ("U.S.") Securities and Exchange Commission (the "SEC") for interim reporting. Certain information and note disclosures included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (the "2023 Form 10-K"). The condensed consolidated balance sheet as of December 30, 2023 included herein has been derived from those audited consolidated financial statements. Our unaudited condensed consolidated financial statements include the accounts of Grocery Outlet Holding Corp. and its wholly owned subsidiary. All intercompany balances and transactions were eliminated. In the opinion of management, these condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented. The interim results of operations and cash flows are not necessarily indicative of those results and cash flows expected for any future interim or annual period. Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from these estimates depending upon certain risks and uncertainties. Changes in these estimates are recorded when known. We consider our accounting policy relating to long-lived asset impairment to be a significant accounting policy that involves management's estimate and judgment. Segment Reporting — We manage our business as one operating segment. In addition, all of our sales were made to customers located in the U.S. and all property and equipment is located in the U.S. Merchandise Inventories — Merchandise inventories are valued at the lower of cost or net realizable value. Cost is determined by the weighted-average cost method for warehouse inventories and the retail inventory method for store inventories. We provide for estimated inventory losses between physical inventory counts based on historical averages. This provision is adjusted periodically to reflect the actual shrink results of the physical inventory counts. Leases — We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, current lease liabilities, and long-term lease liabilities in our condensed consolidated balance sheets. Finance leases are included in other assets, current lease liabilities, and long-term lease liabilities in our condensed consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease over the same term. Right-of-use assets and liabilities are recognized at commencement date based on the present value of the lease payments over the lease term, reduced by landlord incentives. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is estimated to approximate the interest rate on a collateralized basis with similar terms and payments based on the information available at the commencement date, to determine the present value of our lease payments. Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that we will exercise the option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term while finance lease payments are charged to interest expense and depreciation and amortization expense over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; lease expense for these short-term leases is recognized on a straight-line basis over the lease term. We generally lease retail facilities for store locations, distribution centers, office space and equipment and account for these leases as operating leases. We account for one retail store lease and certain equipment leases as finance leases. Lease and non-lease components are accounted for separately. We sublease certain real estate to unrelated third parties under non-cancelable leases and the sublease portfolio consists of operating leases for retail stores. Fair Value Measurements — Fair value is defined as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of financial instruments is categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities Level 2 — Quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — Unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions when pricing the financial instruments, such as cash flow modeling assumptions The assets' or liabilities' fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The fair value framework requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There were no assets or liabilities measured at fair value on a recurring or non-recurring basis as of March 30, 2024 or December 30, 2023. Generally, assets are recorded at fair value on a non-recurring basis as a result of impairment charges. There were no transfers of assets or liabilities between levels within the fair value hierarchy during the 13 weeks ended March 30, 2024. Our financial assets and liabilities are carried at cost, which generally approximates their fair value, as described below: Cash and cash equivalents, independent operator ("IO") receivables, other accounts receivable and accounts payable — The carrying value of such financial instruments approximates their fair value due to factors such as their short-term nature, their variable interest rates or the effect of the related allowance for expected credit losses. Independent operator notes (net) — The carrying value of such financial instruments approximates their fair value due to the effect of the related allowance for expected credit losses. The following table sets forth by level within the fair value hierarchy the carrying amounts and estimated fair values of our significant financial liabilities that are not recorded at fair value on the condensed consolidated balance sheets (amounts in thousands): March 30, December 30, Carrying Amount (1) Estimated Fair Value (2) Carrying Amount (1) Estimated Fair Value (2) Financial Liabilities: Senior term loans (Level 2) $ 290,956 $ 292,500 $ 292,732 $ 294,375 _______________________ (1) The carrying amounts of the senior term loans as of March 30, 2024 and December 30, 2023 were net of debt issuance costs of $1.5 million and $1.6 million, respectively. (2) The estimated fair value of our current senior term loan borrowings under the 2023 Credit Agreement, as defined in Note 3, was deemed to approximate the carrying value, excluding unamortized debt issuance costs, because the interest rate is variable with short reset periods and is reflective of the current market rate. Revenue Recognition Net Sales — We recognize revenue from the sale of products at the point of sale, net of any taxes or deposits collected and remitted to governmental authorities. For e-commerce related sales in which a third-party provides home delivery service, revenue is recognized upon delivery to the customer. Our performance obligations are satisfied upon the transfer of goods to the customer, at the point of sale, and payment from customers is also due at the time of sale. Discounts provided to customers by us are recognized at the time of sale as a reduction in net sales as the products are sold. Discounts provided by IOs are not recognized as a reduction in net sales as these are provided solely by the IO who bears the incremental costs arising from the discount. We do not accept manufacturer coupons. We do not have any material contract assets or receivables from contracts with customers, any revenue recognized in the current year from performance obligations satisfied in previous periods, any material performance obligations other than our gift card deferred revenue liability, or any material costs to obtain or fulfill a contract as of March 30, 2024 and December 30, 2023. Gift Cards — We record a deferred revenue liability when a Grocery Outlet gift card is sold. Revenue related to gift cards is recognized as the gift cards are redeemed, which is when we have satisfied our performance obligation. While gift cards are generally redeemed within 12 months, some are never fully redeemed. We reduce the liability and recognize revenue for the unused portion of the gift cards ("breakage") under the proportional method, where recognition of breakage income is based upon the historical run-off rate of unredeemed gift cards. Our gift card deferred revenue liability was $2.3 million and $3.2 million as of March 30, 2024 and December 30, 2023, respectively. Breakage amounts were immaterial for the 13 weeks ended March 30, 2024 and April 1, 2023. Disaggregated Revenues — The following table presents net sales revenue by type of product for the periods indicated (amounts in thousands): 13 Weeks Ended March 30, April 1, Perishable (1) $ 380,265 $ 345,839 Non-perishable (2) 656,679 619,628 Total net sales $ 1,036,944 $ 965,467 _______________________ (1) Perishable departments include dairy and deli; produce and floral; and fresh meat and seafood. (2) Non-perishable departments include non-perishable grocery; general merchandise; health and beauty care; frozen foods; and beer and wine. Variable Interest Entities — In accordance with the variable interest entities sub-section of Accounting Standards Codification ("ASC") Topic 810, Consolidation , we assess at each reporting period whether we, or any consolidated entity, are considered the primary beneficiary of a variable interest entity ("VIE") and therefore required to consolidate the financial results of the VIE in our condensed consolidated financial statements. Determining whether to consolidate a VIE may require judgment in assessing (i) whether an entity is a VIE, and (ii) if a reporting entity is a VIE's primary beneficiary. A reporting entity is determined to be a VIE's primary beneficiary if it has the power to direct the activities that most significantly impact a VIE's economic performance and the obligation to absorb losses or rights to receive benefits that could potentially be significant to a VIE. We had 472, 466 and 441 stores operated by IOs as of March 30, 2024, December 30, 2023 and April 1, 2023, respectively. We have agreements in place with each IO. The IO orders merchandise exclusively from us which is provided to the IO on consignment. Under the Independent Operator Agreement (the "Operator Agreement"), the IO selects a majority of merchandise that we consign to the IO, which the IO chooses from our merchandise order guide according to the IO's knowledge and experience with local customer purchasing trends, preferences, historical sales and similar factors. The Operator Agreement gives the IO discretion to adjust our initial prices if the overall effect of all price changes at any time comports with the reputation of our Grocery Outlet retail stores for selling quality, name-brand consumables and fresh products and other merchandise at extreme discounts. The IO is required to furnish initial working capital and to acquire certain store and safety assets. The IO is also required to hire, train and employ a properly trained workforce sufficient in number to enable the IO to fulfill its obligations under the Operator Agreement. Additionally, the IO is responsible for expenses required for business operations, including all labor costs, utilities, credit card processing fees, supplies, taxes, fines, levies and other expenses. Either party may terminate the Operator Agreement without cause upon 75 days' notice. As consignor of all merchandise to each IO, the aggregate net sales proceeds from merchandise sales belongs to us. Net sales related to IO stores were $1.0 billion and $951.6 million for the 13 weeks ended March 30, 2024 and April 1, 2023, respectively. We, in turn, pay each IO a commission based on a share of the gross profit of the store. Inventories and related net sales proceeds are our property, and we are responsible for store rent and related occupancy costs. IO commissions are expensed and included in selling, general and administrative expenses. IO commissions were $160.8 million and $145.2 million for the 13 weeks ended March 30, 2024 and April 1, 2023, respectively. IO commissions of $13.9 million and $21.7 million were included in accrued and other current liabilities as of March 30, 2024 and December 30, 2023, respectively. An IO may fund its initial store investment from existing capital, a third-party loan or most commonly through a loan from us, as further discussed in Note 2. As collateral for IO obligations and performance, the Operator Agreement grants us the security interests in the assets owned by each IO related to the respective store. Since the total investment at risk associated with each IO is not sufficient to permit each IO to finance its activities without additional subordinated financial support, each IO is a VIE that we have a variable interest in. To determine if we are the primary beneficiary of a VIE, we evaluate whether we have (i) the power to direct the activities that most significantly impact the IO's economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the IO that could potentially be significant to the IO. Our evaluation includes identification of significant activities and an assessment of the IO's ability to direct those activities. Activities that most significantly impact the IO's economic performance relate to sales and labor. Sales activities that significantly impact the IO's economic performance include determining what merchandise the IO will order and sell and the price of such merchandise, both of which the IO controls. The IO is also responsible for all of its own labor. Labor activities that significantly impact the IO's economic performance include hiring, training, supervising, directing, compensating (including wages, salaries and employee benefits) and terminating all of the employees of the IO, activities which the IO controls. Accordingly, the IO has the power to direct the activities that most significantly impact the IO's economic performance. Furthermore, the mutual termination rights associated with the Operator Agreement illustrate the lack of ultimate control over the IO. Therefore, we are not the primary beneficiary of these VIEs. Our maximum exposure, in accordance with ASC Topic 810, to the IOs is generally limited to the IO notes and IO receivables due from these entities, which was $57.6 million and $59.2 million as of March 30, 2024 and December 30, 2023, respectively. See Note 2 for additional information. Recently Adopted Accounting Standards No recently adopted accounting pronouncements had a material effect in our condensed consolidated financial statements. Recently Issued Accounting Pronouncements Accounting Standards Update ("ASU") No. 2023-07 — In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, Segment Reporting (Topic 280) ("ASU 2023-07"). ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We will adopt ASU 2023-07 upon the effective date and are currently evaluating the impact on our consolidated financial statements and disclosures. ASU No. 2023-09 — In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) ("ASU 2023-09"). ASU 2023-09 requires public entities’ to disclose additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate (the rate reconciliation) for federal, state, and foreign income taxes. It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold. In addition to new disclosures associated with the rate reconciliation, the ASU requires information pertaining to taxes paid (net of refunds received) to be disaggregated for federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We will adopt ASU 2023-09 upon the effective date and are currently evaluating the impact on our consolidated financial statements and disclosures. |
Independent Operator Notes and
Independent Operator Notes and Independent Operator Receivables | 3 Months Ended |
Mar. 30, 2024 | |
Receivables [Abstract] | |
Independent Operator Notes and Independent Operator Receivables | Independent Operator Notes and Independent Operator Receivables The amounts included in IO notes and IO receivables consist primarily of funds we loaned to IOs, net of estimated uncollectible amounts. IO notes, which are payable on demand and have no maturity date, typically bear interest at rates between 5.50% and 9.95%. Accrued interest receivable on IO notes is included within the "independent operator receivables and current portion of independent operator notes, net of allowance" line item on the condensed consolidated balance sheets and was $2.0 million and $1.8 million as of March 30, 2024 and December 30, 2023, respectively. There were no IO notes that were past due or on a non-accrual status due to delinquency as of March 30, 2024 or December 30, 2023. Notes and receivables from our IOs participating in our Temporary Commission Adjustment Program ("TCAP"), as defined below, are not considered to be past due or on a non-accrual status due to delinquency and are excluded from such measures. IO notes and IO receivables are financial assets which are measured and carried at amortized cost. An allowance for expected credit losses is deducted from (for expected losses) or added to (for expected recoveries) the amortized cost basis of these assets to arrive at the net carrying amount expected to be collected for such assets. The allowance is estimated using an expected loss framework, which includes information about past events, current conditions, and reasonable and supportable forecasts that impact the collectibility of the reported amounts of the assets over their lifetime. The allowance is evaluated on a collective basis for assets with shared risk characteristics and credit quality indicators. The primary shared risk characteristic and credit quality indicator pools that we use as a basis for collective evaluation include: • TCAP — Includes the notes and receivables from IOs with stores that have been open for more than 18 months that are participating in our TCAP as of the end of each reporting period. TCAP allows us to provide a greater commission to participating IOs who require assistance in meeting their working capital needs for various reasons, such as new or increased competition or differences in IO skills and experience. • Non-TCAP — Includes the notes and receivables from IOs with stores that have been open for more than 18 months that are not participating in TCAP as of the end of each reporting period. • New store — Includes the notes and receivables from IOs with stores that have been open for less than 18 months as of the end of each reporting period, and may or may not be participating in TCAP. Assets without such shared risk characteristics or credit quality indicators, such as assets with unique circumstances or with delinquencies and historical losses in excess of their TCAP, non-TCAP or new store peers are evaluated on an individual basis. Amounts due from IOs and the related allowances as of March 30, 2024 and December 30, 2023 consisted of the following (amounts in thousands) : Allowance Current Portion Long-term Portion Gross Current Portion Long-term Portion Net March 30, 2024 Independent operator notes $ 41,276 $ (713) $ (10,665) $ 29,898 $ 1,662 $ 28,236 Independent operator receivables 16,314 (4,031) (598) 11,685 11,685 — Total $ 57,590 $ (4,744) $ (11,263) $ 41,583 $ 13,347 $ 28,236 Allowance Current Portion Long-term Portion Gross Current Portion Long-term Portion Net December 30, 2023 Independent operator notes $ 41,123 $ (754) $ (10,435) $ 29,934 $ 1,800 $ 28,134 Independent operator receivables 18,105 (4,338) (624) 13,143 13,143 — Total $ 59,228 $ (5,092) $ (11,059) $ 43,077 $ 14,943 $ 28,134 A summary of activity in the IO notes and IO receivables allowance was as follows (amounts in thousands): 13 Weeks Ended March 30, April 1, Beginning balance $ 16,151 $ 14,747 Provision for IO notes and IO receivables reserves 553 1,348 Write-off of uncollectible for IO notes and IO receivables (697) (138) Ending Balance $ 16,007 $ 15,957 The following table presents the outstanding gross balance of IO notes by fiscal year of origination and credit quality indicator as of March 30, 2024 (amounts in thousands): Fiscal Year of Origination Credit Quality Indicator 2024 (YTD) 2023 2022 2021 2020 Prior Total TCAP $ 541 $ 3,356 $ 6,979 $ 3,383 $ 1,875 $ 1,392 $ 17,526 Non-TCAP 831 3,828 3,542 3,478 2,276 2,460 16,415 New store 1,381 4,637 1,317 — — — 7,335 Total $ 2,753 $ 11,821 $ 11,838 $ 6,861 $ 4,151 $ 3,852 $ 41,276 TCAP IO Notes Notes of IOs participating in our TCAP represented 53.3% and 51.6% of total IO note balances as of March 30, 2024 and December 30, 2023, respectively. A total of $1.2 million of IO notes were added into our TCAP during the 13 weeks ended March 30, 2024. The weighted average contractual interest rate of such IO notes during that period was reduced from 9.95% and, as of March 30, 2024, was 5.50%. In addition, $0.2 million of IO notes were transferred from TCAP to Non-TCAP during the 13 weeks ended March 30, 2024. |
Long-term Debt
Long-term Debt | 3 Months Ended |
Mar. 30, 2024 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt Long-term debt consisted of the following (amounts in thousands): March 30, December 30, 2023 Credit Agreement: Senior term loan due 2028 $ 292,500 $ 294,375 Long-term debt, gross 292,500 294,375 Less: Unamortized debt issuance costs (1,544) (1,643) Long-term debt, less unamortized debt issuance costs 290,956 292,732 Less: Current portion (5,625) (5,625) Long-term debt, net $ 285,331 $ 287,107 2023 Credit Agreement We are party to a credit agreement, dated February 21, 2023 (the "2023 Credit Agreement"), with Bank of America, N.A., as administrative agent and collateral agent, and a syndicate of lenders that consists of (i) a senior secured term loan facility (the "senior term loan") and (ii) a senior secured revolving credit facility (the "revolving credit facility" and, together with the senior term loan, the "credit facilities") in an aggregate principal amount of $400.0 million. The revolving credit facility includes sub-commitments for $50.0 million letters of credit and $25.0 million of swingline loans. Borrowings under the 2023 Credit Agreement bear interest at a rate equal to, at our option, either (a) the base rate, which is defined as a fluctuating rate per annum equal to the greatest of (i) the federal funds rate then in effect, plus 0.50%, (ii) the prime rate then in effect and (iii) a specified Term SOFR (as defined in the 2023 Credit Agreement) rate plus 1.00%, subject to the interest rate floors set forth therein, plus an applicable margin ranging from 0.75% to 1.75% based on our Total Net Leverage Ratio (as defined in the 2023 Credit Agreement); and (b) an adjusted Term SOFR rate determined on the basis of a one, three or six month interest period, plus 0.10%, subject to the interest rate floors set forth therein, plus an applicable margin ranging from 1.75% to 2.75% based on our Total Net Leverage Ratio. As of March 30, 2024, interest on borrowings under the credit facilities was based on one-month Term SOFR with an applicable margin of 2.00%. The 2023 Credit Agreement permits us to add incremental term loan facilities, increase any existing term loan facility, increase revolving commitments, and/or add incremental replacement revolving credit facility tranches. The aggregate principal amount of such incremental facilities are limited to (a) an amount not in excess of the sum of the greater of $200.0 million and 100% of Consolidated EBITDA (as defined in the 2023 Credit Agreement), subject to certain limitations, plus (b) voluntary prepayments of any term loan facility, voluntary permanent reductions of the commitments for the revolving credit facility and voluntary prepayments of indebtedness secured by liens on the collateral securing the credit facilities, subject to certain exceptions, plus (c) an amount such that (assuming that the full amount of any such incremental revolving increase and/or incremental replacement revolving credit facility was drawn, and after giving effect to any appropriate pro forma adjustment events) we would be in compliance, on a pro forma basis (but excluding the cash proceeds of such incurrence), with a Total Net Leverage Ratio of 3.00 to 1.00. Our obligations under the 2023 Credit Agreement are unconditionally guaranteed by the Company’s wholly owned restricted subsidiaries, subject to certain exceptions. All obligations under the 2023 Credit Agreement, and the guarantee of such obligations, are secured, subject to permitted liens and other exceptions, by substantially all of the Company’s assets and those of each subsidiary guarantor. The 2023 Credit Agreement requires us to make scheduled amortization payments of the senior term loan. We may voluntarily prepay the credit facilities, in whole or in part, at any time without premium or penalty, subject to reimbursement of the lenders’ breakage and redeployment costs in applicable cases. Senior Term Loan due 2028 The senior term loan under the 2023 Credit Agreement matures on February 21, 2028 and had an interest rate of 7.43% as of March 30, 2024. Revolving Credit Facility As of March 30, 2024 we had $4.2 million of outstanding letters of credit and $395.8 million of remaining borrowing capacity available under the revolving credit facility, which matures on February 21, 2028. The interest rate on the revolving credit facility was 7.43% as of March 30, 2024. No amounts were outstanding under the revolving credit facility as of March 30, 2024 and December 30, 2023. $25.0 million of principal on the revolving credit facility was borrowed at closing on February 21, 2023 and was subsequently repaid on April 21, 2023. Subsequent to March 30, 2024, in April 2024, $80.0 million of principal was borrowed from the revolving credit facility. We are required to pay a quarterly commitment fee ranging from 0.15% to 0.30% on the daily unused amount of the commitment under the revolving credit facility based upon our Total Net Leverage Ratio. We are also required to pay fronting fees and other customary fees for letters of credit issued under the revolving credit facility. Debt Covenants The 2023 Credit Agreement contains certain customary representations and warranties, subject to limitations and exceptions, and affirmative and customary covenants. The 2023 Credit Agreement contains certain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments; incur additional debt or issue certain disqualified stock and preferred stock; incur liens on assets; merge or consolidate with another company or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets; enter into transactions with affiliates; and allow to exist certain restrictions on the ability of our subsidiaries to pay dividends or make other payments to the borrower. The 2023 Credit Agreement also contains financial performance covenants requiring us to satisfy a maximum total net leverage ratio test and a minimum interest coverage ratio test as of the last day of each fiscal quarter. The maximum total net leverage ratio test requires us to be in compliance with a Total Net Leverage Ratio no greater than 3.50 to 1.00 as of the last day of each test period ending prior to the test period ending on or about December 31, 2025, and no greater than 3.25 to 1.00 as of the last day of each test period ending thereafter, subject to certain adjustments set forth in the 2023 Credit Agreement. The minimum interest coverage ratio test requires us to be in compliance with a Consolidated Interest Coverage Ratio (as defined in the 2023 Credit Agreement) of no less than 1.75 to 1.00 as of the last day of each test period. As of March 30, 2024, we were in compliance with all applicable financial covenant requirements for the 2023 Credit Agreement. Schedule of Principal Maturities Principal maturities of debt as of March 30, 2024 are as follows (amounts in thousands): Remainder of fiscal 2024 $ 3,750 Fiscal 2025 15,000 Fiscal 2026 15,000 Fiscal 2027 15,000 Fiscal 2028 243,750 Thereafter — Total $ 292,500 Interest Expense, Net Interest expense, net, consisted of the following (amounts in thousands): 13 Weeks Ended March 30, April 1, Interest on loans $ 5,678 $ 7,107 Amortization of debt issuance costs and debt discounts 228 401 Interest on finance leases 95 72 Interest income (2,492) (1,661) Capitalized interest (333) — Interest expense, net $ 3,176 $ 5,919 Loss on Debt Extinguishment and Modification Loss on debt extinguishment and modification consisted of the following (amounts in thousands): 13 Weeks Ended March 30, April 1, Write off of debt issuance costs $ — $ 4,518 Write off of debt discounts — 578 Debt modification costs — 244 Loss on debt extinguishment and modification $ — $ 5,340 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 30, 2024 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Share Repurchase Program In November 2021, our Board of Directors approved a share repurchase program. This program, effective November 5, 2021 and without an expiration date, authorizes us to repurchase up to $100.0 million of our outstanding common stock utilizing a variety of methods including open-market purchases, accelerated share repurchase programs, privately negotiated transactions, structured repurchase transactions and under a Rule 10b5-1 plan (which would permit shares to be repurchased when we might otherwise be precluded from doing so under securities laws). Any repurchased shares are constructively retired and returned to an unissued status. During the 13 weeks ended March 30, 2024, we repurchased 200,803 shares of common stock totaling $5.3 million at an average price of $26.52 per share in open-market transactions pursuant to a Rule 10b5-1 plan. During the 13 weeks ended April 1, 2023, we repurchased 122,862 shares of common stock totaling $3.3 million at an average price of $26.66 per share in open-market transactions pursuant to a Rule 10b5-1 plan. As of March 30, 2024, we had $84.4 million of repurchase authority remaining under the share repurchase program. |
Share-based Awards
Share-based Awards | 3 Months Ended |
Mar. 30, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Awards | Share-based Awards For a discussion of our share-based incentive plans, refer to Note 8 of our 2023 Form 10-K. Share-based Award Activity The following table summarizes stock option activity under all equity incentive plans during the 13 weeks ended March 30, 2024: Time-Based Stock Options Performance-Based Stock Options Number of Options Weighted-Average Number of Options Weighted-Average Options outstanding as of December 30, 2023 2,091,523 $ 12.97 227,605 $ 6.62 Exercised (453,640) 7.34 (29,775) 3.81 Options outstanding as of March 30, 2024 1,637,883 $ 14.53 197,830 $ 7.05 Options vested and exercisable as of March 30, 2024 1,627,850 $ 14.53 197,830 $ 7.05 The following table summarizes restricted stock unit ("RSU") activity under all equity incentive plans during the 13 weeks ended March 30, 2024: Number of Shares Weighted-Average Unvested balance as of December 30, 2023 857,820 $ 28.82 Granted 575,389 25.79 Vested (339,198) 29.73 Forfeitures (4,957) 28.08 Unvested balance as of March 30, 2024 1,089,054 $ 26.94 The following table summarizes performance-based restricted stock unit ("PSU") activity under the Grocery Outlet Holding Corp. 2019 Incentive Plan during the 13 weeks ended March 30, 2024: Number of Shares Weighted-Average Unvested balance as of December 30, 2023 1,753,989 $ 29.50 Granted (1) 559,861 25.79 Adjustment for expected performance achievement (2) 88,817 27.34 Vested (301,392) 35.45 Forfeitures (2,364) 27.77 Unvested balance as of March 30, 2024 (3) 2,098,911 $ 27.57 _______________________ (1) Represents initial grant of PSUs based on performance target level achievement of 100%. (2) Represents the year-to-date adjustment to previously granted PSUs based on performance expectations as of March 30, 2024. (3) An additional 648,189 PSUs could potentially be included if the maximum performance level of 200% is reached for all PSUs outstanding as of March 30, 2024. Share-based Compensation Expense We recognize compensation expense for stock options, RSUs and PSUs by amortizing the grant date fair value on a straight-line basis over the expected vesting period to the extent we determine the vesting of the grant is probable. We recognize share-based award forfeitures in the period such forfeitures occur. Share-based compensation expense consisted of the following (amounts in thousands): 13 Weeks Ended March 30, April 1, Time-based stock options $ 9 $ 408 RSUs 3,236 2,495 PSUs 4,897 3,773 Share-based compensation expense $ 8,142 $ 6,676 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our income tax expense (benefit) and effective income tax rate were as follows (amounts in thousands, except percentages): 13 Weeks Ended March 30, April 1, Income tax expense (benefit) $ (1,588) $ 7,839 Effective income tax rate (60.8) % 36.4 % Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete events arising in each respective fiscal quarter. During each interim period, we update the estimated annual effective tax rate. Our effective income tax rate for the 13 weeks ended March 30, 2024 was lower than the combined U.S. federal and state statutory income tax rate primarily due to a pretax book loss combined with excess tax benefits related to the exercise of stock options, partially offset by non-deductible executive compensation under Internal Revenue Code Section 162(m). The decrease in our effective income tax rate for the 13 weeks ended March 30, 2024 compared to the 13 weeks ended April 1, 2023 was primarily driven by a pretax book loss combined with excess tax benefits from the exercise of stock options during the 13 weeks ended March 30, 2024 and excess tax expense related to the vesting of RSUs and PSUs during the 13 weeks ended April 1, 2023. Our policy is to recognize interest and penalties associated with uncertain tax positions as part of the income tax provision in our condensed consolidated statements of operations and comprehensive income (loss) and include accrued interest and penalties with the related income tax liability on our condensed consolidated balance sheets. To date, we have not recognized any interest and penalties, nor have we accrued for or made payments for interest and penalties. We had no uncertain tax positions as of March 30, 2024 and December 30, 2023, respectively, and do not anticipate having any material uncertain tax positions within the next 12 months. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 30, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Related Party Leases As of March 30, 2024 and April 1, 2023, we leased 14 store locations and one warehouse location from entities in which Eric Lindberg, Jr., Chairman of our Board of Directors, or his family, had a direct or indirect financial interest. As of March 30, 2024, the right-of-use assets and lease liabilities related to these properties was $41.7 million and $46.7 million, respectively. As of December 30, 2023, the right-of-use assets and lease liabilities related to these properties was $42.6 million and $47.6 million, respectively. These related parties received aggregate lease payments from us of $1.8 million and $1.7 million for the 13 weeks ended March 30, 2024 and April 1, 2023, respectively. Independent Operator Notes and Independent Operator Receivables We offer interest-bearing notes to IOs and the gross amount of IO operating notes and IO receivables due was $57.6 million and $59.2 million as of March 30, 2024 and December 30, 2023, respectively. See Note 2 for additional information. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are involved from time to time in claims, proceedings and litigation arising in the normal course of business. We establish an accrual for legal proceedings if and when those matters reach a stage where they present loss contingencies that are both probable and reasonably estimable. In such cases, there may be a possible exposure to loss in excess of any amounts accrued. We monitor those matters for developments that would affect the likelihood of a loss and the accrued amount, if any, thereof, and adjust the amount as appropriate. If the loss contingency at issue is not both probable and reasonably estimable, we do not establish an accrual, but will continue to monitor the matter for developments that will make the loss contingency both probable and reasonably estimable. If it is at least a reasonable possibility that a material loss will occur, we will provide disclosure regarding the contingency. Management believes that we do not have any pending litigation that, separately or in the aggregate, would have a material adverse effect on our results of operations, financial condition or cash flows. |
Earnings (Net Loss) Per Share
Earnings (Net Loss) Per Share | 3 Months Ended |
Mar. 30, 2024 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings (Net Loss) Per Share The following table sets forth the calculation of basic and diluted earnings (net loss) per share (amounts in thousands, except per share data): 13 Weeks Ended March 30, April 1, Numerator Net income (loss) and comprehensive income (loss) $ (1,025) $ 13,720 Denominator Weighted-average shares outstanding – basic 99,520 97,920 Effect of dilutive options — 2,122 Effect of dilutive RSUs and PSUs (1) — 527 Weighted-average shares outstanding – diluted 99,520 100,569 Earnings (net loss) per share: Basic $ (0.01) $ 0.14 Diluted $ (0.01) $ 0.14 _______________________ (1) We are required to include in diluted weighted-average shares outstanding contingently issuable shares that would be issued assuming the end of our reporting period was the end of the relevant PSU award contingency period. The following weighted-average common share equivalents were excluded from the calculation of diluted earnings (net loss) per share because their effect would have been anti-dilutive (amounts in thousands): 13 Weeks Ended March 30, April 1, Time-based stock options 1,136 — RSUs and PSUs 895 95 Total 2,031 95 |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 30, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Event | On February 14, 2024, Grocery Outlet Inc., our wholly owned subsidiary, entered into a Stock Purchase Agreement with BBGO Acquisition, Inc., a Delaware corporation ("Holdings"), specified parties therein that beneficially owned Holdings, and Southvest Fund VII, L.P., a Delaware limited partnership, to acquire all of the issued and outstanding capital stock of Holdings (the "Transaction"). On April 1, 2024, the Transaction was completed for the net purchase consideration of approximately $62 million, including cash on hand, and subject to post-closing adjustments. Holdings is the owner of all of the issued and outstanding capital stock of The Bargain Barn, Inc., a Tennessee corporation doing business as United Grocery Outlet ("United Grocery Outlet"). United Grocery Outlet operated 40 discount grocery stores across six states in the southeastern United States as of March 30, 2024. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Pay vs Performance Disclosure | ||
Net income (loss) | $ (1,025) | $ 13,720 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 30, 2024 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted or terminated by our directors and Officers (as such term is defined under Section 16 of the Exchange Act) during the 13 weeks ended March 30, 2024, which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act, referred to as Rule 10b5-1 trading plan: Name and Position Date of Adoption of Rule 10b5-1 Trading Plan Date of Termination of Rule 10b5-1 Trading Plan Scheduled Expiration of Rule 10b5-1 Trading Plan (1) Aggregate Number of Securities to be Purchased or Sold Eric J. Lindberg, Jr. Chairman of the Board of Directors 8/15/2023 2/29/2024 8/23/2024 Up to 680,000 shares of our common stock upon the exercise of stock options (2) Steven K. Wilson EVP, Chief Purchasing Officer 8/28/2023 3/18/2024 8/16/2024 Up to 144,666 shares of our common stock (which included 32,017 shares upon the exercise of stock options) (2) Robert J. Sheedy, Jr. President and Chief Executive Officer; Director 3/4/2024 Not applicable 11/25/2024 (3) Up to 10,389 shares of our common stock upon the exercise of stock options (3) _______________________ (1) A trading plan may also expire on such earlier date as all transactions under the trading plan are completed. (2) The stock options included in Mr. Lindberg and Mr. Wilson's 10b5-1 plans had expiration dates of October 21, 2024 and November 25, 2024, respectively. (3) The stock options included in Mr. Sheedy's 10b5-1 plan have an expiration date of November 25, 2024. Due to the expiration of the stock options on such date, that is the effective termination date of the plan. |
Non-Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Robbert J. Sheedy , Jr. [Member] | |
Trading Arrangements, by Individual | |
Name | Robert J. Sheedy, Jr. |
Title | President and Chief Executive Officer; Director |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | 3/4/2024 |
Arrangement Duration | 266 days |
Aggregate Available | 10,389 |
Eric J. Lindberg, Jr. [Member] | |
Trading Arrangements, by Individual | |
Name | Eric J. Lindberg, Jr. |
Title | Chairman of the Board of Directors |
Adoption Date | 8/15/2023 |
Rule 10b5-1 Arrangement Terminated | true |
Termination Date | 2/29/2024 |
Arrangement Duration | 198 days |
Aggregate Available | 680,000 |
Steven K. Wilson [Member] | |
Trading Arrangements, by Individual | |
Name | Steven K. Wilson |
Title | EVP, Chief Purchasing Officer |
Adoption Date | 8/28/2023 |
Rule 10b5-1 Arrangement Terminated | true |
Termination Date | 3/18/2024 |
Arrangement Duration | 203 days |
Aggregate Available | 144,666 |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the United States ("U.S.") Securities and Exchange Commission (the "SEC") for interim reporting. Certain information and note disclosures included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (the "2023 Form 10-K"). The condensed consolidated balance sheet as of December 30, 2023 included herein has been derived from those audited consolidated financial statements. |
Consolidation | Our unaudited condensed consolidated financial statements include the accounts of Grocery Outlet Holding Corp. and its wholly owned subsidiary. All intercompany balances and transactions were eliminated. In the opinion of management, these condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented. The interim results of operations and cash flows are not necessarily indicative of those results and cash flows expected for any future interim or annual period. |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from these estimates depending upon certain risks and uncertainties. Changes in these estimates are recorded when known. We consider our accounting policy relating to long-lived asset impairment to be a significant accounting policy that involves management's estimate and judgment. |
Segment Reporting | We manage our business as one operating segment. In addition, all of our sales were made to customers located in the U.S. and all property and equipment is located in the U.S. |
Merchandise Inventories | Merchandise inventories are valued at the lower of cost or net realizable value. Cost is determined by the weighted-average cost method for warehouse inventories and the retail inventory method for store inventories. We provide for estimated inventory losses between physical inventory counts based on historical averages. This provision is adjusted periodically to reflect the actual shrink results of the physical inventory counts. |
Leases | We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, current lease liabilities, and long-term lease liabilities in our condensed consolidated balance sheets. Finance leases are included in other assets, current lease liabilities, and long-term lease liabilities in our condensed consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease over the same term. Right-of-use assets and liabilities are recognized at commencement date based on the present value of the lease payments over the lease term, reduced by landlord incentives. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is estimated to approximate the interest rate on a collateralized basis with similar terms and payments based on the information available at the commencement date, to determine the present value of our lease payments. Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that we will exercise the option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term while finance lease payments are charged to interest expense and depreciation and amortization expense over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; lease expense for these short-term leases is recognized on a straight-line basis over the lease term. We generally lease retail facilities for store locations, distribution centers, office space and equipment and account for these leases as operating leases. We account for one retail store lease and certain equipment leases as finance leases. Lease and non-lease components are accounted for separately. We sublease certain real estate to unrelated third parties under non-cancelable leases and the sublease portfolio consists of operating leases for retail stores. |
Fair Value Measurements | Fair value is defined as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of financial instruments is categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities Level 2 — Quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — Unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions when pricing the financial instruments, such as cash flow modeling assumptions The assets' or liabilities' fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The fair value framework requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There were no assets or liabilities measured at fair value on a recurring or non-recurring basis as of March 30, 2024 or December 30, 2023. Generally, assets are recorded at fair value on a non-recurring basis as a result of impairment charges. There were no transfers of assets or liabilities between levels within the fair value hierarchy during the 13 weeks ended March 30, 2024. Our financial assets and liabilities are carried at cost, which generally approximates their fair value, as described below: Cash and cash equivalents, independent operator ("IO") receivables, other accounts receivable and accounts payable — The carrying value of such financial instruments approximates their fair value due to factors such as their short-term nature, their variable interest rates or the effect of the related allowance for expected credit losses. Independent operator notes (net) — The carrying value of such financial instruments approximates their fair value due to the effect of the related allowance for expected credit losses. |
Revenue Recognition | Net Sales — We recognize revenue from the sale of products at the point of sale, net of any taxes or deposits collected and remitted to governmental authorities. For e-commerce related sales in which a third-party provides home delivery service, revenue is recognized upon delivery to the customer. Our performance obligations are satisfied upon the transfer of goods to the customer, at the point of sale, and payment from customers is also due at the time of sale. Discounts provided to customers by us are recognized at the time of sale as a reduction in net sales as the products are sold. Discounts provided by IOs are not recognized as a reduction in net sales as these are provided solely by the IO who bears the incremental costs arising from the discount. We do not accept manufacturer coupons. We do not have any material contract assets or receivables from contracts with customers, any revenue recognized in the current year from performance obligations satisfied in previous periods, any material performance obligations other than our gift card deferred revenue liability, or any material costs to obtain or fulfill a contract as of March 30, 2024 and December 30, 2023. Gift Cards |
Variable Interest Entities | In accordance with the variable interest entities sub-section of Accounting Standards Codification ("ASC") Topic 810, Consolidation , we assess at each reporting period whether we, or any consolidated entity, are considered the primary beneficiary of a variable interest entity ("VIE") and therefore required to consolidate the financial results of the VIE in our condensed consolidated financial statements. Determining whether to consolidate a VIE may require judgment in assessing (i) whether an entity is a VIE, and (ii) if a reporting entity is a VIE's primary beneficiary. A reporting entity is determined to be a VIE's primary beneficiary if it has the power to direct the activities that most significantly impact a VIE's economic performance and the obligation to absorb losses or rights to receive benefits that could potentially be significant to a VIE. We had 472, 466 and 441 stores operated by IOs as of March 30, 2024, December 30, 2023 and April 1, 2023, respectively. We have agreements in place with each IO. The IO orders merchandise exclusively from us which is provided to the IO on consignment. Under the Independent Operator Agreement (the "Operator Agreement"), the IO selects a majority of merchandise that we consign to the IO, which the IO chooses from our merchandise order guide according to the IO's knowledge and experience with local customer purchasing trends, preferences, historical sales and similar factors. The Operator Agreement gives the IO discretion to adjust our initial prices if the overall effect of all price changes at any time comports with the reputation of our Grocery Outlet retail stores for selling quality, name-brand consumables and fresh products and other merchandise at extreme discounts. The IO is required to furnish initial working capital and to acquire certain store and safety assets. The IO is also required to hire, train and employ a properly trained workforce sufficient in number to enable the IO to fulfill its obligations under the Operator Agreement. Additionally, the IO is responsible for expenses required for business operations, including all labor costs, utilities, credit card processing fees, supplies, taxes, fines, levies and other expenses. Either party may terminate the Operator Agreement without cause upon 75 days' notice. As consignor of all merchandise to each IO, the aggregate net sales proceeds from merchandise sales belongs to us. Net sales related to IO stores were $1.0 billion and $951.6 million for the 13 weeks ended March 30, 2024 and April 1, 2023, respectively. We, in turn, pay each IO a commission based on a share of the gross profit of the store. Inventories and related net sales proceeds are our property, and we are responsible for store rent and related occupancy costs. IO commissions are expensed and included in selling, general and administrative expenses. IO commissions were $160.8 million and $145.2 million for the 13 weeks ended March 30, 2024 and April 1, 2023, respectively. IO commissions of $13.9 million and $21.7 million were included in accrued and other current liabilities as of March 30, 2024 and December 30, 2023, respectively. An IO may fund its initial store investment from existing capital, a third-party loan or most commonly through a loan from us, as further discussed in Note 2. As collateral for IO obligations and performance, the Operator Agreement grants us the security interests in the assets owned by each IO related to the respective store. Since the total investment at risk associated with each IO is not sufficient to permit each IO to finance its activities without additional subordinated financial support, each IO is a VIE that we have a variable interest in. To determine if we are the primary beneficiary of a VIE, we evaluate whether we have (i) the power to direct the activities that most significantly impact the IO's economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the IO that could potentially be significant to the IO. Our evaluation includes identification of significant activities and an assessment of the IO's ability to direct those activities. Activities that most significantly impact the IO's economic performance relate to sales and labor. Sales activities that significantly impact the IO's economic performance include determining what merchandise the IO will order and sell and the price of such merchandise, both of which the IO controls. The IO is also responsible for all of its own labor. Labor activities that significantly impact the IO's economic performance include hiring, training, supervising, directing, compensating (including wages, salaries and employee benefits) and terminating all of the employees of the IO, activities which the IO controls. Accordingly, the IO has the power to direct the activities that most significantly impact the IO's economic performance. Furthermore, the mutual termination rights associated with the Operator Agreement illustrate the lack of ultimate control over the IO. Therefore, we are not the primary beneficiary of these VIEs. |
Recently Adopted Accounting Standards and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Standards No recently adopted accounting pronouncements had a material effect in our condensed consolidated financial statements. Recently Issued Accounting Pronouncements Accounting Standards Update ("ASU") No. 2023-07 — In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, Segment Reporting (Topic 280) ("ASU 2023-07"). ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We will adopt ASU 2023-07 upon the effective date and are currently evaluating the impact on our consolidated financial statements and disclosures. ASU No. 2023-09 — In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) ("ASU 2023-09"). ASU 2023-09 requires public entities’ to disclose additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate (the rate reconciliation) for federal, state, and foreign income taxes. It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold. In addition to new disclosures associated with the rate reconciliation, the ASU requires information pertaining to taxes paid (net of refunds received) to be disaggregated for federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We will adopt ASU 2023-09 upon the effective date and are currently evaluating the impact on our consolidated financial statements and disclosures. |
Income Tax | Our policy is to recognize interest and penalties associated with uncertain tax positions as part of the income tax provision in our condensed consolidated statements of operations and comprehensive income (loss) and include accrued interest and penalties with the related income tax liability on our condensed consolidated balance sheets. To date, we have not recognized any interest and penalties, nor have we accrued for or made payments for interest and penalties. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Carrying Amount and Estimated Fair Values of Financial Liabilities | The following table sets forth by level within the fair value hierarchy the carrying amounts and estimated fair values of our significant financial liabilities that are not recorded at fair value on the condensed consolidated balance sheets (amounts in thousands): March 30, December 30, Carrying Amount (1) Estimated Fair Value (2) Carrying Amount (1) Estimated Fair Value (2) Financial Liabilities: Senior term loans (Level 2) $ 290,956 $ 292,500 $ 292,732 $ 294,375 _______________________ (1) The carrying amounts of the senior term loans as of March 30, 2024 and December 30, 2023 were net of debt issuance costs of $1.5 million and $1.6 million, respectively. (2) The estimated fair value of our current senior term loan borrowings under the 2023 Credit Agreement, as defined in Note 3, was deemed to approximate the carrying value, excluding unamortized debt issuance costs, because the interest rate is variable with short reset periods and is reflective of the current market rate. |
Schedule of Sales Revenue by Product | The following table presents net sales revenue by type of product for the periods indicated (amounts in thousands): 13 Weeks Ended March 30, April 1, Perishable (1) $ 380,265 $ 345,839 Non-perishable (2) 656,679 619,628 Total net sales $ 1,036,944 $ 965,467 _______________________ (1) Perishable departments include dairy and deli; produce and floral; and fresh meat and seafood. |
Independent Operator Notes an_2
Independent Operator Notes and Independent Operator Receivables (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Receivables [Abstract] | |
Schedule of Amounts Due from Independent Operators | Amounts due from IOs and the related allowances as of March 30, 2024 and December 30, 2023 consisted of the following (amounts in thousands) : Allowance Current Portion Long-term Portion Gross Current Portion Long-term Portion Net March 30, 2024 Independent operator notes $ 41,276 $ (713) $ (10,665) $ 29,898 $ 1,662 $ 28,236 Independent operator receivables 16,314 (4,031) (598) 11,685 11,685 — Total $ 57,590 $ (4,744) $ (11,263) $ 41,583 $ 13,347 $ 28,236 Allowance Current Portion Long-term Portion Gross Current Portion Long-term Portion Net December 30, 2023 Independent operator notes $ 41,123 $ (754) $ (10,435) $ 29,934 $ 1,800 $ 28,134 Independent operator receivables 18,105 (4,338) (624) 13,143 13,143 — Total $ 59,228 $ (5,092) $ (11,059) $ 43,077 $ 14,943 $ 28,134 |
Schedule of Allowance for Credit Loss Activity | A summary of activity in the IO notes and IO receivables allowance was as follows (amounts in thousands): 13 Weeks Ended March 30, April 1, Beginning balance $ 16,151 $ 14,747 Provision for IO notes and IO receivables reserves 553 1,348 Write-off of uncollectible for IO notes and IO receivables (697) (138) Ending Balance $ 16,007 $ 15,957 |
Schedule of Independent Operator Notes by Credit Quality Indicators and Year of Origination | The following table presents the outstanding gross balance of IO notes by fiscal year of origination and credit quality indicator as of March 30, 2024 (amounts in thousands): Fiscal Year of Origination Credit Quality Indicator 2024 (YTD) 2023 2022 2021 2020 Prior Total TCAP $ 541 $ 3,356 $ 6,979 $ 3,383 $ 1,875 $ 1,392 $ 17,526 Non-TCAP 831 3,828 3,542 3,478 2,276 2,460 16,415 New store 1,381 4,637 1,317 — — — 7,335 Total $ 2,753 $ 11,821 $ 11,838 $ 6,861 $ 4,151 $ 3,852 $ 41,276 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consisted of the following (amounts in thousands): March 30, December 30, 2023 Credit Agreement: Senior term loan due 2028 $ 292,500 $ 294,375 Long-term debt, gross 292,500 294,375 Less: Unamortized debt issuance costs (1,544) (1,643) Long-term debt, less unamortized debt issuance costs 290,956 292,732 Less: Current portion (5,625) (5,625) Long-term debt, net $ 285,331 $ 287,107 |
Schedule of Principal Maturities | Principal maturities of debt as of March 30, 2024 are as follows (amounts in thousands): Remainder of fiscal 2024 $ 3,750 Fiscal 2025 15,000 Fiscal 2026 15,000 Fiscal 2027 15,000 Fiscal 2028 243,750 Thereafter — Total $ 292,500 |
Schedule of Interest Expense, Net | Interest expense, net, consisted of the following (amounts in thousands): 13 Weeks Ended March 30, April 1, Interest on loans $ 5,678 $ 7,107 Amortization of debt issuance costs and debt discounts 228 401 Interest on finance leases 95 72 Interest income (2,492) (1,661) Capitalized interest (333) — Interest expense, net $ 3,176 $ 5,919 |
Schedule of Loss on Debt Extinguishment and Modification Cost | Loss on debt extinguishment and modification consisted of the following (amounts in thousands): 13 Weeks Ended March 30, April 1, Write off of debt issuance costs $ — $ 4,518 Write off of debt discounts — 578 Debt modification costs — 244 Loss on debt extinguishment and modification $ — $ 5,340 |
Share-based Awards (Tables)
Share-based Awards (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes stock option activity under all equity incentive plans during the 13 weeks ended March 30, 2024: Time-Based Stock Options Performance-Based Stock Options Number of Options Weighted-Average Number of Options Weighted-Average Options outstanding as of December 30, 2023 2,091,523 $ 12.97 227,605 $ 6.62 Exercised (453,640) 7.34 (29,775) 3.81 Options outstanding as of March 30, 2024 1,637,883 $ 14.53 197,830 $ 7.05 Options vested and exercisable as of March 30, 2024 1,627,850 $ 14.53 197,830 $ 7.05 |
Schedule of RSU Activity | The following table summarizes restricted stock unit ("RSU") activity under all equity incentive plans during the 13 weeks ended March 30, 2024: Number of Shares Weighted-Average Unvested balance as of December 30, 2023 857,820 $ 28.82 Granted 575,389 25.79 Vested (339,198) 29.73 Forfeitures (4,957) 28.08 Unvested balance as of March 30, 2024 1,089,054 $ 26.94 |
Schedule of PSU Activity | The following table summarizes performance-based restricted stock unit ("PSU") activity under the Grocery Outlet Holding Corp. 2019 Incentive Plan during the 13 weeks ended March 30, 2024: Number of Shares Weighted-Average Unvested balance as of December 30, 2023 1,753,989 $ 29.50 Granted (1) 559,861 25.79 Adjustment for expected performance achievement (2) 88,817 27.34 Vested (301,392) 35.45 Forfeitures (2,364) 27.77 Unvested balance as of March 30, 2024 (3) 2,098,911 $ 27.57 _______________________ (1) Represents initial grant of PSUs based on performance target level achievement of 100%. (2) Represents the year-to-date adjustment to previously granted PSUs based on performance expectations as of March 30, 2024. (3) |
Schedule of Share-Based Compensation Expense | Share-based compensation expense consisted of the following (amounts in thousands): 13 Weeks Ended March 30, April 1, Time-based stock options $ 9 $ 408 RSUs 3,236 2,495 PSUs 4,897 3,773 Share-based compensation expense $ 8,142 $ 6,676 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense (Benefit) and Effective Tax Rate | Our income tax expense (benefit) and effective income tax rate were as follows (amounts in thousands, except percentages): 13 Weeks Ended March 30, April 1, Income tax expense (benefit) $ (1,588) $ 7,839 Effective income tax rate (60.8) % 36.4 % |
Earnings (Net Loss) Per Share (
Earnings (Net Loss) Per Share (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the calculation of basic and diluted earnings (net loss) per share (amounts in thousands, except per share data): 13 Weeks Ended March 30, April 1, Numerator Net income (loss) and comprehensive income (loss) $ (1,025) $ 13,720 Denominator Weighted-average shares outstanding – basic 99,520 97,920 Effect of dilutive options — 2,122 Effect of dilutive RSUs and PSUs (1) — 527 Weighted-average shares outstanding – diluted 99,520 100,569 Earnings (net loss) per share: Basic $ (0.01) $ 0.14 Diluted $ (0.01) $ 0.14 _______________________ (1) We are required to include in diluted weighted-average shares outstanding contingently issuable shares that would be issued assuming the end of our reporting period was the end of the relevant PSU award contingency period. |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following weighted-average common share equivalents were excluded from the calculation of diluted earnings (net loss) per share because their effect would have been anti-dilutive (amounts in thousands): 13 Weeks Ended March 30, April 1, Time-based stock options 1,136 — RSUs and PSUs 895 95 Total 2,031 95 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | ||
Mar. 30, 2024 USD ($) store segment retailStoreLease | Apr. 01, 2023 USD ($) store | Dec. 30, 2023 USD ($) store | |
Subsidiary, Sale of Stock [Line Items] | |||
Number of stores | store | 474 | ||
Number of operating segments | segment | 1 | ||
Number of leases | retailStoreLease | 1 | ||
Gift card, redemption period (in months) | 12 months | ||
Contract with customer, liability | $ 2,300 | $ 3,200 | |
Variable interest entity, number of stores | store | 472 | 441 | 466 |
Variable interest entity, termination period | 75 days | ||
Net sales | $ 1,036,944 | $ 965,467 | |
Accrued and other current liabilities | 63,064 | $ 66,655 | |
Variable Interest Entity, Not Primary Beneficiary | |||
Subsidiary, Sale of Stock [Line Items] | |||
Net sales | 1,000,000 | 951,600 | |
Sales commissions and fees | 160,800 | $ 145,200 | |
Accrued and other current liabilities | 13,900 | 21,700 | |
Maximum loss exposure | $ 57,600 | $ 59,200 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Schedule of Carrying Amount and Estimated Fair Values of Financial Liabilities (Details) - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt issuance costs, net | $ 1,500 | $ 1,600 |
Fair Value, Inputs, Level 2 | Carrying Amount | Senior Term Loans | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial Liabilities | 290,956 | 292,732 |
Fair Value, Inputs, Level 2 | Estimated Fair Values | Senior Term Loans | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial Liabilities | $ 292,500 | $ 294,375 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Schedule of Sales Revenue by Product (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Disaggregation of Revenue [Line Items] | ||
Sales | $ 1,036,944 | $ 965,467 |
Perishable | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 380,265 | 345,839 |
Non-Perishable | ||
Disaggregation of Revenue [Line Items] | ||
Sales | $ 656,679 | $ 619,628 |
Independent Operator Notes an_3
Independent Operator Notes and Independent Operator Receivables - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 30, 2024 | Dec. 30, 2023 | |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Accrued interest receivable | $ 2,000,000 | $ 1,800,000 |
Independent operator notes, nonaccrual | 0 | 0 |
Independent operator notes | $ 29,898,000 | $ 29,934,000 |
TCAP | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Independent operator notes, outstanding percentage (as a percent) | 53.30% | 51.60% |
Independent operator notes, transferred to (from) TCAP | $ 1,200,000 | |
Non-TCAP | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Independent operator notes, transferred to (from) TCAP | (200,000) | |
Financial Asset, Past Due | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Independent operator notes | $ 0 | $ 0 |
Minimum | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Independent operator notes, stated interest rate (as a percent) | 5.50% | |
Maximum | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Independent operator notes, stated interest rate (as a percent) | 9.95% | |
Weighted Average | TCAP | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Independent operator notes, weighted average interest rate (as a percent) | 5.50% | 9.95% |
Independent Operator Notes an_4
Independent Operator Notes and Independent Operator Receivables - Schedule of Amounts Due from Independent Operators (Details) - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Independent operator notes | ||
Gross | $ 41,276 | $ 41,123 |
Allowance, Current Portion | (713) | (754) |
Allowance, Long-term Portion | (10,665) | (10,435) |
Net | 29,898 | 29,934 |
Current Portion | 1,662 | 1,800 |
Long-term Portion | 28,236 | 28,134 |
Independent operator receivables | ||
Gross | 16,314 | 18,105 |
Allowance, Current Portion | (4,031) | (4,338) |
Allowance, Long-Term Portion | (598) | (624) |
Net | 11,685 | 13,143 |
Current Portion | 11,685 | 13,143 |
Long-term Portion | 0 | 0 |
Total | ||
Gross | 57,590 | 59,228 |
Allowance, Current Portion | (4,744) | (5,092) |
Allowance, Long-Term Portion | (11,263) | (11,059) |
Net | 41,583 | 43,077 |
Current Portion | 13,347 | 14,943 |
Long-term Portion | $ 28,236 | $ 28,134 |
Independent Operator Notes an_5
Independent Operator Notes and Independent Operator Receivables - Schedule of Allowance for Credit Loss Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Accounts And Financing Receivable, Allowance For Credit Loss [Roll Forward] | ||
Beginning balance | $ 16,151 | $ 14,747 |
Provision for IO notes and IO receivables reserves | 553 | 1,348 |
Write-off of uncollectible for IO notes and IO receivables | (697) | (138) |
Ending Balance | $ 16,007 | $ 15,957 |
Independent Operator Notes an_6
Independent Operator Notes and Independent Operator Receivables - Schedule of Independent Operator Notes by Credit Quality Indicators and Year of Origination (Details) - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Financing Receivable, Credit Quality Indicator [Line Items] | ||
2024 (YTD) | $ 2,753 | |
2023 | 11,821 | |
2022 | 11,838 | |
2021 | 6,861 | |
2020 | 4,151 | |
Prior | 3,852 | |
Total | 41,276 | $ 41,123 |
TCAP | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
2024 (YTD) | 541 | |
2023 | 3,356 | |
2022 | 6,979 | |
2021 | 3,383 | |
2020 | 1,875 | |
Prior | 1,392 | |
Total | 17,526 | |
Non-TCAP | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
2024 (YTD) | 831 | |
2023 | 3,828 | |
2022 | 3,542 | |
2021 | 3,478 | |
2020 | 2,276 | |
Prior | 2,460 | |
Total | 16,415 | |
New store | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
2024 (YTD) | 1,381 | |
2023 | 4,637 | |
2022 | 1,317 | |
2021 | 0 | |
2020 | 0 | |
Prior | 0 | |
Total | $ 7,335 |
Long-term Debt - Schedule of Lo
Long-term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 292,500 | $ 294,375 |
Less: Unamortized debt issuance costs | (1,544) | (1,643) |
Total | 290,956 | 292,732 |
Less: Current portion | (5,625) | (5,625) |
Long-term debt, net | 285,331 | 287,107 |
Senior term loan due 2028 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 292,500 | $ 294,375 |
Long-term Debt - Narrative (Det
Long-term Debt - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Mar. 30, 2024 | Apr. 21, 2023 | Feb. 21, 2023 | May 08, 2024 | Mar. 30, 2024 | Dec. 30, 2023 | |
Credit Agreement | Senior Notes | Fed Funds Effective Rate Overnight Index Swap Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 0.50% | |||||
Credit Agreement | Senior Notes | Specified Term Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 1% | |||||
Credit Agreement | Senior Notes | Specified Term Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 0.75% | |||||
Credit Agreement | Senior Notes | Specified Term Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 1.75% | |||||
Credit Agreement | Senior Notes | One, Three Or Six Month Interest Period Adjusted Term SOFR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 0.10% | |||||
Credit Agreement | Senior Notes | One, Three Or Six Month Interest Period Adjusted Term SOFR | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 1.75% | |||||
Credit Agreement | Senior Notes | One, Three Or Six Month Interest Period Adjusted Term SOFR | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 2.75% | |||||
Credit Agreement | Senior Notes | One Month Interest Period Adjusted Term SOFR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 2% | |||||
Senior term loan due 2028 | Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Effective interest rate (as a percent) | 7.43% | 7.43% | ||||
Revolving Credit Facility | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee percentage (as a percent) | 0.15% | |||||
Revolving Credit Facility | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee percentage (as a percent) | 0.30% | |||||
Revolving Credit Facility | Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, leverage ratio | 3 | |||||
Revolving Credit Facility | Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Effective interest rate (as a percent) | 7.43% | 7.43% | ||||
Remaining borrowing capacity | $ 395,800,000 | $ 395,800,000 | ||||
Long-term line of credit | 0 | $ 0 | $ 0 | |||
Proceeds from line of credit | $ 25,000,000 | |||||
Repayments of lines of credit | $ 25,000,000 | |||||
Debt instrument, interest coverage ratio | 1.75 | |||||
Revolving Credit Facility | Credit Agreement | Subsequent Event | ||||||
Debt Instrument [Line Items] | ||||||
Proceeds from line of credit | $ 80,000,000 | |||||
Revolving Credit Facility | Credit Agreement | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, leverage ratio | 3.25 | |||||
Revolving Credit Facility | Credit Agreement | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, leverage ratio | 3.50 | |||||
Revolving Credit Facility | Credit Agreement | Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 400,000,000 | |||||
Debt covenant, maximum principal amount for incremental facilities | $ 200,000,000 | |||||
Debt covenant, maximum percent of consolidated EBITDA for incremental facilities (as a percent) | 100% | |||||
Letter of Credit | Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Letters of credit outstanding | $ 4,200,000 | $ 4,200,000 | ||||
Letter of Credit | Credit Agreement | Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 50,000,000 | |||||
Bridge Loan | Credit Agreement | Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 25,000,000 |
Long-term Debt - Schedule of Pr
Long-term Debt - Schedule of Principal Maturities (Details) - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Debt Disclosure [Abstract] | ||
Remainder of fiscal 2024 | $ 3,750 | |
Fiscal 2025 | 15,000 | |
Fiscal 2026 | 15,000 | |
Fiscal 2027 | 15,000 | |
Fiscal 2028 | 243,750 | |
Thereafter | 0 | |
Total | $ 292,500 | $ 294,375 |
Long-term Debt - Schedule of In
Long-term Debt - Schedule of Interest Expense, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Debt Disclosure [Abstract] | ||
Interest on loans | $ 5,678 | $ 7,107 |
Amortization of debt issuance costs and debt discounts | 228 | 401 |
Interest on finance leases | 95 | 72 |
Interest income | (2,492) | (1,661) |
Capitalized interest | (333) | 0 |
Interest expense, net | $ 3,176 | $ 5,919 |
Long-term Debt - Schedule of _2
Long-term Debt - Schedule of Loss on Debt Extinguishment and Modification Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Debt Disclosure [Abstract] | ||
Write off of debt issuance costs | $ 0 | $ 4,518 |
Write off of debt discounts | 0 | 578 |
Debt modification costs | 0 | 244 |
Loss on debt extinguishment and modification | $ 0 | $ 5,340 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 30, 2024 | Apr. 01, 2023 | Nov. 05, 2021 | |
Subsidiary, Sale of Stock [Line Items] | |||
Repurchase of common stock (in shares) | 200,803 | 122,862 | |
Repurchase of common stock | $ 5.3 | $ 3.3 | |
Average price of shares repurchased (in usd per share) | $ 26.52 | $ 26.66 | |
Stock repurchase program, remaining authorized amount | $ 84.4 | ||
Maximum | |||
Subsidiary, Sale of Stock [Line Items] | |||
Share repurchase authorized amount | $ 100 |
Share-based Awards - Schedule o
Share-based Awards - Schedule of Stock Option Activity (Details) | 3 Months Ended |
Mar. 30, 2024 $ / shares shares | |
Time-Based Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | |
Options outstanding, beginning balance (in shares) | shares | 2,091,523 |
Exercised (in shares) | shares | (453,640) |
Options outstanding, ending balance (in shares) | shares | 1,637,883 |
Options vested and exercisable (in shares) | shares | 1,627,850 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted-Average Exercise Price, beginning balance (in usd per share) | $ / shares | $ 12.97 |
Exercised (in usd per share) | $ / shares | 7.34 |
Weighted-Average Exercise Price, ending balance (in usd per share) | $ / shares | 14.53 |
Options vested and exercisable (in usd per share) | $ / shares | $ 14.53 |
Performance-Based Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | |
Options outstanding, beginning balance (in shares) | shares | 227,605 |
Exercised (in shares) | shares | (29,775) |
Options outstanding, ending balance (in shares) | shares | 197,830 |
Options vested and exercisable (in shares) | shares | 197,830 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted-Average Exercise Price, beginning balance (in usd per share) | $ / shares | $ 6.62 |
Exercised (in usd per share) | $ / shares | 3.81 |
Weighted-Average Exercise Price, ending balance (in usd per share) | $ / shares | 7.05 |
Options vested and exercisable (in usd per share) | $ / shares | $ 7.05 |
Share-based Awards - Schedule_2
Share-based Awards - Schedule of RSU and PSU Activity (Details) | 3 Months Ended |
Mar. 30, 2024 $ / shares Rate shares | |
RSUs | |
Number of Shares | |
Unvested, beginning balance (in shares) | 857,820 |
Granted (in shares) | 575,389 |
Vested (in shares) | (339,198) |
Forfeitures (in shares) | (4,957) |
Unvested, ending balance (in shares) | 1,089,054 |
Weighted-Average Grant Date Fair Value | |
Unvested, beginning balance (in usd per share) | $ / shares | $ 28.82 |
Granted (in usd per share) | $ / shares | 25.79 |
Vested (in usd per share) | $ / shares | 29.73 |
Forfeitures (in usd per share) | $ / shares | 28.08 |
Unvested, ending balance (in usd per share) | $ / shares | $ 26.94 |
PSUs | |
Number of Shares | |
Unvested, beginning balance (in shares) | 1,753,989 |
Granted (in shares) | 559,861 |
Adjustment for expected performance achievement (in shares) | 88,817 |
Vested (in shares) | (301,392) |
Forfeitures (in shares) | (2,364) |
Unvested, ending balance (in shares) | 2,098,911 |
Weighted-Average Grant Date Fair Value | |
Unvested, beginning balance (in usd per share) | $ / shares | $ 29.50 |
Granted (in usd per share) | $ / shares | 25.79 |
Adjustment for expected performance achievement (in usd per share) | $ / shares | 27.34 |
Vested (in usd per share) | $ / shares | 35.45 |
Forfeitures (in usd per share) | $ / shares | 27.77 |
Unvested, ending balance (in usd per share) | $ / shares | $ 27.57 |
Performance target level, percentage (as a percent) | 1 |
PSUs | Maximum | |
Weighted-Average Grant Date Fair Value | |
Performance target level, percentage (as a percent) | Rate | 200% |
PSUs | Pro Forma | |
Number of Shares | |
Adjustment for expected performance achievement (in shares) | 648,189 |
Share-based Awards - Schedule_3
Share-based Awards - Schedule of Share-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense | $ 8,142 | $ 6,676 |
Time-based stock options | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense | 9 | 408 |
RSUs | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense | 3,236 | 2,495 |
PSUs | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense | $ 4,897 | $ 3,773 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Expense and Effective Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ (1,588) | $ 7,839 |
Effective income tax rate (as a percent) | (60.80%) | 36.40% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | Mar. 30, 2024 | Dec. 30, 2023 |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 3 Months Ended | ||
Mar. 30, 2024 USD ($) warehouse store | Apr. 01, 2023 USD ($) warehouse store | Dec. 30, 2023 USD ($) | |
Related Party Transaction [Line Items] | |||
Number of stores | store | 474 | ||
Operating lease, right-of-use asset | $ 949,065 | $ 945,710 | |
Aggregate annual lease payments | $ 1,700 | ||
Accounts and financing receivable, before allowance for credit loss | $ 57,590 | 59,228 | |
Related Party | |||
Related Party Transaction [Line Items] | |||
Number of stores | store | 14 | 14 | |
Number of warehouses | warehouse | 1 | 1 | |
Operating lease, right-of-use asset | $ 41,700 | 42,600 | |
Operating lease liability | 46,700 | $ 47,600 | |
Aggregate annual lease payments | $ 1,800 |
Earnings (Net Loss) Per Share -
Earnings (Net Loss) Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Numerator | ||
Net income (loss) | $ (1,025) | $ 13,720 |
Comprehensive (loss) income | $ (1,025) | $ 13,720 |
Denominator | ||
Weighted-average shares outstanding – basic (in shares) | 99,520 | 97,920 |
Weighted-average shares outstanding – diluted (in shares) | 99,520 | 100,569 |
Earnings (net loss) per share: | ||
Basic (in usd per share) | $ (0.01) | $ 0.14 |
Diluted (in usd per share) | $ (0.01) | $ 0.14 |
Employee Stock Option | ||
Denominator | ||
Effect of dilutive awards (in shares) | 0 | 2,122 |
RSUs And PSUs | ||
Denominator | ||
Effect of dilutive awards (in shares) | 0 | 527 |
Earnings (Net Loss) Per Share_2
Earnings (Net Loss) Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,031 | 95 |
Employee Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,136 | 0 |
RSUs and PSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 895 | 95 |
Subsequent Event (Details)
Subsequent Event (Details) - BBGO Acquisition $ in Millions | Apr. 01, 2024 USD ($) | Mar. 30, 2024 store |
Subsequent Event [Line Items] | ||
Number of discount grocery stores operated | 40 | |
Number of states with discount grocery stores operations | 6 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Purchase consideration | $ | $ 62 |