Shares of Grocery Outlet Holding Corp. (GO) tumbled 5.08% in after-hours trading on Tuesday following the release of the company's third-quarter earnings report and revised full-year guidance. The extreme-value retailer's results fell short of expectations in key areas, prompting concerns about its near-term growth prospects.

For the third quarter, Grocery Outlet reported net sales of $1.17 billion, up 5.4% year-over-year but missing analyst estimates of $1.18 billion. The company's comparable store sales increased by a modest 1.2%, reflecting challenges in driving customer traffic and transaction sizes. More worryingly, Grocery Outlet lowered its fiscal 2025 comparable store sales growth guidance to 0.6%-0.9%, down from the previous forecast of 1.0%-2.0%, signaling potential headwinds in the coming quarters.

While the company beat expectations on adjusted earnings per share, reporting $0.21 versus the estimated $0.19, investors seemed more focused on the top-line miss and reduced outlook. Grocery Outlet also trimmed its full-year adjusted EBITDA guidance to $258 million-$262 million, down from the previous range of $260 million-$270 million. These revisions, coupled with a slight decline in gross margin to 30.4% from 31.1% last year, appear to have shaken investor confidence in the company's growth trajectory, leading to the sharp after-hours sell-off.