Traffic Growth Evident, But Basket Pressures Persist as Comps Still Negative

Research evidence excerpt

Traffic Growth Evident, But Basket Pressures Persist as Comps Still Negative

USA | Discount Retailers

Grocery Outlet EquityMayResearch14, 2026

TARGET CHANGETraffic Growth Evident, But Basket Pressures

RATING HOLDPersist as Comps Still Negative

PRICE $7.74^

GO delivered early signs of stabilization with improving traffic and ~200bps

OP (opportunistic product) mix gains supporting value perception, but comps PRICE TARGET | % TO PT $9.00 ($7.00) | +16%

remain negative as basket pressure persists. While store closures and tighter 52W HIGH-LOW $19.41 - $5.66

discipline are clear structural positives, the debate centers on basket (a driver of FLOAT (%) | ADV MM (USD) 92.4% | 22.69

comp trajectory) and margin recovery as promotions roll off. Raising PT to $9. MARKET CAP $760.1M

TICKER GO

^Prior trading day's closing price unless otherwise

What We DID LIKE In The Quarter noted.

Price: After-hours trading price

1) Traffic Accelerating And Showing Early Stabilization. GO delivered ~2% traffic growth, with

steady sequential improvement, with March materially stronger, in the +2%-5% range. Momentum

appears driven by improving value perception and opportunistic supply, supporting an improved FY (Dec) CHANGE TO JEFe JEF vs CONS

SSS scenario ahead (although, the Q2 guide does point to a decel vs Q1--likely a reflection of 2026 2027 2026 2027

conservatism in our view). One element we do want to note as well is the potential benefit or trade REV NM NA +1% NM

down GO is realizing from higher fuel prices (especially in CA where gas prices are higher), possibly EPS NA NA NM +18%

helping to support traffic NT.

2026 ($) Q1 Q2 Q3 Q4 FY

2) Opportunistic Mix Improving And Driving The Model. Mgmt noted ~200bps improvement in EPS -- -- -- -- 0.50