Grocery Outlet Holding IPO: What You Need To Know

Even as brick-and-mortar retailers continue to suffer due to changing consumer dynamics and a fluid economic environment, a franchised grocery chain has managed to stand tall and towering amid the ruins.

The IPO Terms

Emeryville, California-based Grocery Outlet Holding Corp. is set to offer 17.19 million shares in an IPO, according to updated S-1/A filing on June 18. The company expects to price the offering between $18 and $19, up from the $15-$17 price range it outlined in a June 10 filing.

The size of the offering is about $381.02 million, assuming pricing at the midpoint of the estimated price range.

Grocery Outlet has applied for a Nasdaq listing under the ticker symbol GO.

Bank Of America Merrill Lynch, Morgan Stanley, Deutsche Bank, Jefferies, Barclays, Goldman Sachs, Guggenheim Securities, UBS, and Cowen are among the underwriters for the offering.

The Company

Grocery Outlet is a high-growth, extreme value retailer of name-brand consumables and fresh products sold through a network of independently-operated stores. Leveraging its flexible buying model, the company is able to offer its name-brand opportunistic products at generally 40-70% below those of conventional retailers.

Its stores are run by entrepreneurial independent operators, or IOs, who run the stores, creating a neighborhood feel through personalized customer service and localized product offering.

With the strategy, the company has been reporting positive comps for 15 straight years. The store count has grown at a CAGR of 10% since 2015 and currently stands at over 300 stores.

The Finances

Grocery Outlet generated net sales of $2.29 billion in fiscal year ended Dec. 2018, up 10% year over year from $2.08 billion in 2017. For the three months ended March 2019, the company raked in net sales of $606.27 million.

The bottom line for fiscal year 2018 fell from 30 cents per share to 24 cent per share, while for the three months ended March 2019, the earnings per share was 6 cents.

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