Grocery Outlet Holding Corp's stock plunged 30.06% in pre-market trading on Wednesday following the release of its fourth-quarter 2024 earnings results and disappointing guidance for 2025. The discount grocery chain missed analysts' earnings estimates for Q4, and its 2025 outlook fell short of expectations due to ongoing operational challenges and plans for strategic restructuring.

In Q4, Grocery Outlet reported adjusted earnings per share of $0.15, missing estimates of $0.17. Gross margins were pressured by higher egg prices and elevated inventory shrinkage related to continued systems issues from its recent major systems conversion. For 2025, the company guided for adjusted EPS of $0.70 to $0.75, well below consensus estimates, reflecting higher costs, restructuring charges, and investments in systems and infrastructure.

To address the execution challenges and improve profitability, Grocery Outlet announced plans to moderate its new store growth, exiting certain underperforming markets. The company plans to open 33 to 35 net new stores in 2025, down from previous expectations of around 55 to 60 stores. It also expects to incur restructuring charges of $36 million to $45 million related to exiting store leases, organizational restructuring, and supply chain changes.

Furthermore, Grocery Outlet appointed new leadership, with Jason Potter joining as the President and CEO, and Chris Miller as the Chief Financial Officer. The new executives aim to drive operational improvements, enhance systems and inventory management, focus on capital allocation, and simplify strategic initiatives to improve profitability and returns on invested capital over the long term.