Grocery Outlet Holding Corp. 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk Our operating results are subject to market risk from interest rate fluctuations on our credit facilities, which bear variable interest rates. As of September 30, 2023, our outstanding borr owings included $296.3 million from our senior term loan under the 2023 Credit Agreement. As of September 30, 2023, the interest rate on the senior term loan was 7.42% (See Note 3 to our condensed consolidated financial statements for additional information). Based on the outstanding balance and interest rate of our senior term loan as of September 30, 2023, a hypothetical 10% relative increase or decrease in the interest rate would cause an increase or decrease in interest expense of approximately $2.2 million over the next 12 months. We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future. Impact of Inflation Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have experienced over the last several years varying levels of inflation, resulting in part from various supply disruptions, increased shipping and transportation costs, increased commodity costs, increased labor costs in the supply chain, increased SG&A related to personnel, travel, and other operational costs and other disruptions caused by the current macroeconomic environment. Similarly, our IOs have been impacted by staffing challenges and increased labor costs and utility costs within their businesses. Furthermore, our results of operations and financial condition may be materially impacted by inflation in the future. 34 Table of Contents