What changed in this filing

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Item 9A. Controls and Procedures

2025-02-26 compared with 2024-02-28 · 73 added, 41 removed, 196 unchanged (37% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this report.

Our disclosure controls are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as a result of the material weakness in our internal control over financial reporting, described below, as of December 30, 2023.

Under the supervision and with the participation of our management including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded our disclosure controls and procedures were not effective as of December 28, 2024 due to the ongoing remediation of our previously identified material weakness in our internal control over financial reporting.

A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis.

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The Company's management conducted an assessment of the Company's internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013).

In connection with this assessment, the Company’s management identified deficiencies in the design and operating effectiveness of controls in its internal control over financial reporting related to certain information technology general computer controls ("ITGC’s").

The replacement of components of our enterprise resource planning system in late August 2023 led to a significant increase in the volume of transactions across user access, program change management, and IT operations for which our existing controls were not designed to address.

As a result, certain of the Company’s related business controls that are dependent upon the affected ITGC’s were also deemed ineffective.

We did not identify any misstatements to the consolidated financial statements as of and for the year ended December 30, 2023 because of these control deficiencies.

As a result, certain of the Company’s related business controls that are dependent upon the affected ITGCs were also deemed ineffective.

As of December 28, 2024 management’s assessment concluded that the controls required to remediate the material weakness were designed and implemented appropriately, however, certain controls have not consistently operated effectively for a sufficient period of time to conclude the material weakness was remediated.

We did not identify any material misstatements to the consolidated financial statements as of and for the year ended December 28, 2024 because of these control deficiencies.

However, the pervasive impact of these control deficiencies to the Company's internal control over financial reporting created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.

Therefore, we concluded that the deficiencies represent a material weakness in our internal control over financial reporting and, as such, our internal control over financial reporting was not effective as of December 28, 2024.

Deloitte & Touche LLP, an independent registered public accounting firm, who audited the fiscal 2023 consolidated financial statements included in this Annual Report on Form 10-K, issued an adverse report on the Company’s internal control over financial reporting reflecting this material weakness as of December 30, 2023 as stated in its report which is set forth below.

Remediation Plan

Management is in the process of establishing a remediation plan and expects its remediation efforts will involve implementing additional controls or a redesign of controls to ensure that user access, program change management and IT operations controls are designed and operating effectively.

These remediation efforts began during the fiscal quarter ended December 30, 2023 and are expected to be completed during the fiscal year ending December 28, 2024.

Deloitte & Touche LLP, an independent registered public accounting firm, who audited the fiscal 2024 consolidated financial statements included in this Form 10-K, issued an adverse report on the Company’s internal control over financial reporting reflecting this material weakness as of December 28, 2024 as stated in its report which is set forth below.

Material Weakness and Remediation Plan

We have taken steps to remediate the control deficiencies contributing to the material weakness described above.

Management has redesigned certain controls and implemented additional training for user access, program change management, and information technology operations controls.

Our remediation progress has also included hiring additional internal and external resources.

The corrective controls were implemented during the fiscal year ending December 28, 2024, but need to continue operating effectively for a sufficient period of time to conclude the material weakness has been remediated.

The remediation will thereafter be completed after management has concluded through testing that these controls have operated effectively for a sufficient period of time.

Changes in Internal Control over Financial Reporting

Other than the material weakness described above, which was identified by management as part of the Company annual assessment of internal control over financial reporting, during the fiscal quarter ended December 30, 2023, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

On April 1, 2024, Grocery Outlet Inc., our wholly owned subsidiary, acquired BBGO Acquisition, Inc., a holding company that owns all of the outstanding capital stock of The Bargain Barn Inc., which does business as United Grocery Outlet (See NOTE 15—Business Combination to our Consolidated Financial Statements for additional information).

United Grocery Outlet's financial statements constitute less than 1% and 1% of net and total assets, respectively, 3% of revenues, and less than 1% of net income of the consolidated financial statement amounts as of and for the year ended December 28, 2024.

We are currently integrating United Grocery Outlet into our internal control framework and processes and, pursuant to the SEC's guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our internal control over financial reporting as of December 28, 2024 did not include United Grocery Outlet.

Other than the remediation efforts and changes identified above, during the fiscal quarter ended December 28, 2024, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only

reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 28, 2024, of the Company and our report dated February 26, 2025, expressed an unqualified opinion on those financial statements.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at United Grocery Outlet, which was acquired on April 1, 2024, and whose financial statements constitute less than 1% and 1% of net and total assets, respectively, 3% of revenues, and less than 1% of net income of the consolidated financial statement amounts as of and for the year ended December 28, 2024.

Accordingly, our audit did not include the internal control over financial reporting at United Grocery Outlet.

Basis for Opinion

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The Company concluded that the pervasive impact of these control deficiencies to the Company's internal control over financial reporting created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.

The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 30, 2023, of the Company, and this report does not affect our report on such financial statements.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 28, 2024, of the Company, and this report does not affect our report on such financial statements.

/s/ DELOITTE & TOUCHE LLP

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated herein by reference from sections entitled "Corporate Governance and Board Matters," "Executive Officers," "Proposals for Consideration at Annual Meeting – Proposal 1 – Election of Class II Directors" and "Additional Information" in our definitive Proxy Statement related to the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year ended December 30, 2023 (the "2024 Proxy Statement").

There were no material changes to the procedures by which stockholders may recommend nominees to our board of directors.

The information required by this item is incorporated herein by reference from sections entitled "Corporate Governance and Board Matters," "Executive Officers," "Proposals for Consideration at Annual Meeting – Proposal 1 – Election of Class III Directors," " Compensation Discussion and Analysis—Securities Trading Policy ," and "Additional Information" in our definitive Proxy Statement related to the 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year ended December 28, 2024 (the "2025 Proxy Statement").

There were no material changes to the procedures by which stockholders may recommend nominees to our Board.

EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference from sections entitled "Compensation Discussion and Analysis," "Named Executive Officer Compensation Tables" (excluding the information under the subheading "Pay Versus Performance"), "Corporate Governance and Board Matters – Director Compensation," "Corporate Governance and Board Matters – Board of Directors – Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report" in our 2024 Proxy Statement.

However, the Compensation Committee Report included in such 2024 Proxy Statement shall not be deemed "filed" with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by us with the SEC, regardless of any general incorporation language in such filing.

The information required by this item is incorporated herein by reference from sections entitled "Compensation Discussion and Analysis," "Named Executive Officer Compensation Tables" (excluding the information under the subheading "Pay Versus Performance"), "Corporate Governance and Board Matters – Director Compensation," and "Compensation Committee Report" in our 2025 Proxy Statement.

However, the Compensation Committee Report included in such 2025 Proxy Statement shall not be deemed "filed" with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by us with the SEC pursuant to the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Annual Report on Form 10-K:

(a) The following documents are filed as part of this Form 10-K:

Consolidated Financial Statements

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Financial Statement Schedules

All schedules have been omitted because they are either not required, not applicable, not present in amounts sufficient to require submission of the schedule, or the required information is included elsewhere in this Annual Report on Form 10-K.

Incorporated by Reference

Exhibit Form File

Stock Purchase Agreement, dated February 14, 2024, by and among Grocery Outlet Inc., BBGO Acquisition, Inc.

the sellers party thereto, and Southvest Fund VII, L.P.

3.1 Restated Certificate of Incorporation of Grocery Outlet Holding Corp.

47 unchanged sentences

10-Q 001-38950 5/10/2023 10.8

10.12† 2024 Form of Performance Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan)

10-Q 001-38950 5/8/2024

10.13† Form of Restricted Stock Unit Grant Notice and Agreement (Grocery Outlet Holding Corp.

2019 Incentive Plan) (Interim CEO)

8-K 001-38950 10/30/2024

Restricted Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan) (CEO Form)

2019 Stock Incentive Plan) ( Form for Mr.

10-K 001-38950 3/1/2023 10.34

4 unchanged sentences

8-K 001-38950 11/8/2022 10.2

Non-Employee Director Compensation Policy (as amended June 3, 2024)

10-Q 001-38950

Grocery Outlet Holding Corp.

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8-K 001-38950 11/8/2022 10.1

Consulting Agreement, dated February 29, 2024, by and between Charles C.

Bracher and Grocery Outlet Inc.

8-K 001-38950

Amendment to Consulting Agreement, dated as of September 1, 2024, by and between Charles C.

Bracher and Grocery Outlet Inc.

Interim Chief Executive Officer Agreement, dated October 29, 2024, by and between Eric J.

Lindberg, Jr., Grocery Outlet Holding Corp.

and Grocery Outlet Inc.

8-K 001-38950

Form of Indemnification Agreement between Grocery Outlet Holding Corp.

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10-Q 001-38950 5/10/2023 10.5

21.1* Subsidiary of the Registrant

Grocery Outlet Securities Trading Policy (Revised August 24, 2023)

21.1* Subsidiaries of the Registrant

23.1* Consent of Deloitte and Touche LLP

24.1* Power of Attorney (incorporated by reference to the signature page to this Annual Report on Form 10-K)

24.1* Power of Attorney (incorporated by reference to the signature page to this Form 10-K)

31.1* Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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Incentive Compensation Clawback Policy

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Extension Calculation Linkbase Document

101.DEF Inline XBRL Extension Definition Linkbase Document

101.LAB Inline XBRL Extension Label Linkbase Document

101.PRE Inline XBRL Extension Presentation Linkbase Document

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Extension Calculation Linkbase Document

Inline XBRL Extension Definition Linkbase Document

Inline XBRL Extension Label Linkbase Document

Inline XBRL Extension Presentation Linkbase Document

Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document and included as Exhibit 101.

____________________________________

Schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Company agrees to furnish any omitted schedules or exhibits upon the request of the SEC.

† Management contract or compensatory plan or arrangement.

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Furnished herewith.

The certifications attached as Exhibit 32.1 and 32.2 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Grocery Outlet Holding Corp.

under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.

The certifications attached as Exhibit 32.1 and 32.2 that accompany this Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Grocery Outlet Holding Corp.

under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.

FORM 10-K SUMMARY

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February 26, 2025 By:

/s/ Robert J.

/s/ Jason Potter

President and Chief Executive Officer

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POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitute and appoint Robert J.

Sheedy, Jr., Lindsay E.

Gray and Luke D.

Thompson, or any of them, his or her attorneys-in-fact, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitute and appoint Jason Potter, Christopher M.

Miller and Luke D.

Thompson, or any of them, his attorneys-in-fact, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Robert J.

/s/ Jason Potter

President and Chief Executive Officer;

(Principal Executive Officer) February 26, 2025

/s/ Charles C.

Bracher Chief Financial Officer

(Principal Financial Officer) February 28, 2024

/s/ Christopher M.

Executive Vice President, Chief Financial Officer

(Principal Financial Officer)

February 26, 2025

Christopher M.

/s/ Lindsay E.

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Lindberg, Jr.

Director, Chairman of the Board February 28, 2024

Chairman of the Board

February 26, 2025

Lindberg, Jr.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures