Wrapping up Q4 earnings, we look at the numbers and key takeaways for the non-discretionary retail stocks, including Grocery Outlet (NASDAQ:GO) and its peers.

Food is non-discretionary because it's essential for life (maybe not those Oreos?), so consumers naturally need a place to buy it. Selling food is a notoriously tough business, however, as the costs of procuring and transporting oftentimes perishable products and operating stores fit to sell those products can be high. Competition is also fierce because the alternatives are numerous. While online competition threatens all of retail, grocery is one of the least penetrated because of the nature of the product. Still, we could be one startup or innovation away from a paradigm shift.

The 8 non-discretionary retail stocks we track reported a decent Q4; on average, revenues were in line with analyst consensus estimates. while next quarter's revenue guidance was 0.8% above consensus. Investors abandoned cash-burning companies to buy stocks with higher margins of safety, but non-discretionary retail stocks held their ground better than others, with the share prices up 2.7% on average since the previous earnings results.

Grocery Outlet (NASDAQ:GO)

Due to its differentiated procurement and buying approach, Grocery Outlet (NASDAQ:GO) is a discount grocery store chain that offers substantial discounts on name-brand products.

Grocery Outlet reported revenues of $989.8 million, up 6.3% year on year, in line with analyst expectations. It was a strong quarter for the company, with optimistic earnings guidance for the full year and a decent beat of analysts' earnings estimates.

"Our value proposition continues to resonate with consumers resulting in strong traffic and transaction count growth. During 2023, we increased our market share, achieved record sales of $4 billion, and grew Adjusted EBITDA by 18%," said RJ Sheedy, CEO of Grocery Outlet.

Grocery Outlet achieved the highest full-year guidance raise of the whole group. The stock is up 2% since the results and currently trades at $27.01.

Is now the time to buy Grocery Outlet? Access our full analysis of the earnings results here, it's free.

Best Q4: Walmart (NYSE:WMT)

Known for its large-format Supercenters, Walmart (NYSE:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.

Walmart reported revenues of $173.4 billion, up 5.7% year on year, outperforming analyst expectations by 2.4%. It was an impressive quarter for the company, with revenue, gross margin, and EPS exceeding expectations. That performance was driven by beats in its U.S. and International Walmart operations.

Walmart scored the biggest analyst estimates beat among its peers. The stock is up 5.2% since the results and currently trades at $59.73.

Is now the time to buy Walmart? Access our full analysis of the earnings results here, it's free.

Weakest Q4: Dollar General (NYSE:DG)

Appealing to the budget-conscious consumer, Dollar General (NYSE:DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.

Dollar General reported revenues of $9.86 billion, down 3.4% year on year, in line with analyst expectations. It was a mixed quarter for the company, with revenue narrowly outperformed Wall Street's estimates on a same store sales beat.

Dollar General had the slowest revenue growth in the group. The stock is down 0.8% since the results and currently trades at $156.75.

Read our full analysis of Dollar General's results here.

Sprouts (NASDAQ:SFM)

Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ:SFM) is a grocery store chain emphasizing natural and organic products.

Sprouts reported revenues of $1.70 billion, up 7.7% year on year, in line with analyst expectations. It was a very strong quarter for the company, with optimistic earnings guidance for the full year.

The stock is up 18.9% since the results and currently trades at $63.88.

Read our full, actionable report on Sprouts here, it's free.

Target (NYSE:TGT)

With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.

Target reported revenues of $31.92 billion, up 1.7% year on year, in line with analyst expectations. It was a mixed quarter for the company, with an impressive beat of analysts' gross margin estimates but underwhelming earnings guidance for the next quarter.

The stock is up 13.1% since the results and currently trades at $170.21.

Read our full, actionable report on Target here, it's free.

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