GO - An “Opportunity” to Reclaim the Extreme Value Mantle May Take Time—We Remain NEUTRAL-Rated

Research evidence excerpt

GO - An “Opportunity” to Reclaim the Extreme Value Mantle May Take Time—We Remain NEUTRAL-Rated

May 15, 2026

John Heinbockel john.heinbockel@guggenheimpartners.com GO - An “Opportunity” to Reclaim the Extreme Value

212 381 4135 Mantle May Take Time—We Remain NEUTRAL-

Steven Forbes, CFA, CPA

steven.forbes@guggenheimpartners.com Rated

212 381 4188

Julio Marquez Key Message: The turnaround is exhibiting “green shoots”, especially around julio.marquez@guggenheimpartners.com opportunistic product-driven traffic gains, although units per transaction ("UPT") pressure 212 823 6605

and a lack of conversion is surprising and will be required for the resumption of the

Jacob Nivasch algo and a higher EBITDA multiple. 1Q operating results, with comps declining 1% and

jacob.nivasch@guggenheimpartners.com EBITDA margin eroding 40 basis points excluding store closing-related markdowns, were

212 338 8837 unacceptable especially for an extreme value retailer that has historically excelled during

Max Horowitz difficult macro backdrops. The traffic-UPT dichotomy reflects a disrupted value perception

max.horowitz@guggenheimpartners.com from the product and pricing missteps dating back to 2024 which take time to correct. As

212 518 9974 a result, we stand at the low end of the 2026 EBITDA guide and remain NEUTRAL-rated,

though we recognize that the current 5.3x multiple—see Exhibit 1—is very modest and

the resulting risk/reward profile intriguing.

In-Line, But Still Pressured, 1Q Results. 1Q operating results were in-line to slightly betterGO NEUTRAL

Grocery Outlet Holding Corp. than our expectations, though the bar had been lowered, and absolute momentum remains

Sector: Food Retail uninspiring marked by declining comps and eroding gross and EBITDA margins. As detailed