Grocery Outlet Business Overview March 2021

1 Disclaimer

Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect management's current views and estimates regarding the prospects of the industry and the Company’s prospects, plans, business, results of operations, financial position, future financial performance and business strategy. These forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "should," "expect," "intend," "will," "estimate," "anticipate," "believe," "predict," "potential" or "continue" or the negatives of these terms or variations of them or similar terminology. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, the Company cannot provide any assurance that these expectations will prove to be correct. The following factors are among those that may cause actual results to differ materially from the forward-looking statements: failure of suppliers to consistently supply us with opportunistic products at attractive pricing; inability to successfully identify trends and maintain a consistent level of opportunistic products; failure to maintain or increase comparable store sales; changes affecting prices of the products we sell; failure to open, relocate or remodel stores on schedule; risks associated with newly opened stores; inability to retain the loyalty of our customers; costs and implementation difficulties associated with marketing, advertising and promotions; failure to maintain our reputation and the value of our , including protecting our intellectual property; any significant disruption to our distribution network, the operations of our distributions centers and our timely receipt of inventory; inability to maintain sufficient levels of cash flow from our operations; risks associated with leasing substantial amounts of space; failure to participate effectively or at all in the growing online marketplace; unexpected costs and negative effects if we incur losses not covered by our insurance program; inability to attract, train and retain highly qualified employees; difficulties associated with labor relations; loss of our key personnel or inability to hire additional qualified personnel; risks associated with economic conditions; competition in the retail food industry; movement of consumer trends toward private labels and away from name-brand products; major health epidemics, such as the outbreak of COVID-19, and other outbreaks; natural disasters and unusual weather conditions (whether or not caused by climate change), power outages, pandemic outbreaks, terrorist acts, global political events and other serious catastrophic events; failure to maintain the security of information we hold relating to personal information or payment card data of our customers, employees and suppliers; material disruption to our information technology systems; risks associated with products we and our independent operators ("IOs") sell; risks associated with laws and regulations generally applicable to retailers; legal proceedings from customers, suppliers, employees, governments or competitors; failure of our IOs to successfully manage their business; failure of our IOs to repay notes outstanding to us; inability to attract and retain qualified IOs; inability of our IOs to avoid excess inventory shrink; any loss or changeover of an IO; legal proceedings initiated against our IOs; legal challenges to the IO/independent contractor business model; failure to maintain positive relationships with our IOs; risks associated with actions our IOs could take that could harm our business; our substantial indebtedness could affect our ability to operate our business, react to changes in the economy or industry or pay our debts and meet our obligations; our ability to generate cash flow to service our substantial debt obligations; impairment of goodwill and other intangible assets; any significant decline in our operating profit and taxable income; risks associated with tax matters; changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters; failure to comply with requirements to design, implement and maintain effective internal controls; and the other factors discussed under "Risk Factors" in the Company’s most recent reports on Forms 10-Q and 10-K. Such risk factors may be updated from time to time in the Company’s periodic filings with the SEC. The Company’s periodic filings are accessible on the SEC’s website at www.sec.gov. You should not rely upon forward-looking statements as predictions of future events. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee that the future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or occur. Except as required by applicable law, the Company undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this news release to conform these statements to actual results or to changes in our expectations. Industry Information Market data and industry information used throughout this presentation are based on management’s knowledge of the industry and the good faith estimates of management. We also relied, to the extent available, upon management’s review of independent industry surveys and publications and other publicly available information prepared by a number of third-party sources. All of the market data and industry information used in this presentation involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Although we believe that these sources are reliable, we cannot guarantee the accuracy or completeness of this information, and we have not independently verified this information. While we believe the estimated market position, market opportunity and market size information included in this presentation are generally reliable, such information, which is derived in part from management’s estimates and beliefs, is inherently uncertain and imprecise. Projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described above. These and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by independent parties. Non-GAAP Financial Measures We present Adjusted EBITDA and Adjusted EBITDA margin to help us describe our operating performance. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin is intended as a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). Adjusted EBITDA and Adjusted EBITDA margin should not be considered as an alternative to operating income (loss), net income (loss), earnings per share or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or operating cashflows or as measures of liquidity. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by these items. See the supplemental materials to this presentation for a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to net income (loss). 2 Data in this presentation are generally as of, or for the 2020 fiscal year ended January 2, 2021, unless otherwise noted. COMPANY OVERVIEW Our Positioning & COVID-19 Response

…And We have Acted Decisively to Support Our Business Model is Well Positioned… Customers, IOs and Partners

IOs manage labor payment at the store-level and comply with Enacted comprehensive safety measures in observance of  the mandates of their local government  CDC & public health guidelines

We provide our customers with extreme value at a time Worked closely with supplier partners to keep pace with  when they are seeking to maximize savings  demand, purchasing opportunistic & everyday products

We offer an assortment of familiar & trusted high-quality, Supported IOs by providing financial support and  name-brand consumables along with fresh products  guidance through a COVID call center, Clean, Safe Store initiative, and updates on local operating requirements  We have a flexible supply chain, logistics network and  Focused customer communications on local product merchandising to respond to demand spikes availability, safety precautions and community outreach

 We serve as pillars of our local communities with  Maintained a strong liquidity position with $105mm of cash personalized service and over $90mm available on our revolving credit facility

We Are Proud of Our IOs & Their Employees, Who Have Stepped Up in These Extraordinary Times

4 Grocery Outlet Is a Differentiated, High-Growth, Off-Price Retailer

Differentiated Model Attractive Store Base Strong Financial Performance

67

56 40% - 70% 8 $3.1bn 19 Prices Below ConventionalRetailers 9 FY 2020 On Our BestDeals 221 Net Sales ~50% $223mm Opportunistically FY 2020 Sourced Products 380 Stores Across 6 States(1) AdjustedEBITDA 5,000 10% 17 Ever-Changing SKUs Per Store Store Count CAGR Consecutive Years of Positive Promote Treasure HuntExperience FY 2015 to FY 2020 Comparable Store Sales Growth (3) 340+ 1,900 5.6% Independent Operators In-Market and Neighboring Average Comparable Store Sales Create Local Shopping Experience States Potential Stores (2) Growth Over Past 17 Years (3) ~14,000 40%+ $105mm Square Foot Year 4 Cash-on-Cash Returns Cash Balance as of FY 2020(1) Average Store Size Historically

(1) As of January 2, 2021. (2) Source:eSite. (3) Fiscal years 2004-2020. 5 We Have Continued to Make Significant Progress Since Our IPO

Q4 2020 Results FY 2020 Results

Delivered Solid  Comparable stores sales growth of 7.9%  Comparable stores sales growth of 12.7% Business  Net Sales grew 23.1% to $806.8mm  Net Sales growth of 22.5% Performance  Adjusted EBITDA grew 24.7% to $51.2mm  Adjusted EBITDA grew 32.4% to $222.9mm

 Compelling value and treasure hunt experience from strong opportunisticpurchasing Continued Solid  Broad-based growth with Natural, Organic, Specialty, Healthy (NOSH), fresh categories, and beer and wine as standouts Product, IO  Continued growth of newly introduced fresh seafood and grass-fed meat Performance, and Marketing  Improvements in ordering and distribution systems that enhance IO localized assortment decisions Execution  GO brand refresh supported by new Bargain Bliss marketing campaign  Continued growth in email subscriber database to driveengagement

 Opened 35 new stores (2 closures) in FY 2020 Expanded Footprint and  New stores are performing well and in-line with expectations Growth  Began developing the East infrastructure, with new store openings planned in 2021 Initiatives  Continued to invest in talent & systems to build the infrastructure that will support future growth

 Reduced net leverage (3) from 5.5x pre-IPO to 1.6x FY 2020 Improved  Flexible credit facility with no principal payments due until 2025 and ample capacity vs. 7x leverage covenant Balance Sheet  Cash balance of $105mm as of FY 2020-end

(1) Defined as (Total Debt – Cash) / FY 2020 Adj. EBITDA.

6 The WOW! Shopping Experience

PRICE QUALITY SERVICE • Extreme value • Name-brand products • Locally owned and operated • ~40% average basket • Fresh • Friendly, high-touch service savings (1) • Natural Organic Specialty • Active in community • ~40% - 70% savings on Healthy (NOSH) • Family-run stores (1) best deals • Quality guarantee • Easy-to-shop stores • Distinct and proven buying • Clean, well-merchandised model stores

TREASURE HUNT DISCOVERY = FUN!

• Unexpected deals

• Ever-changing assortment

• Curated and localized merchandise

7 (1) Compared to conventional grocers. Grocery Outlet’s Model Is Well-Positioned Against Other Off-Price / Discount Retailers

Opportunistic Treasure Hunt E-Commerce as Sourcing Experience a % of Sales ✓ ✓ 0% ✓ ✓ 0% ✓ ✓ <5% ✓ ✓ <2% ✓ ✓ 0% ✓ ✓ <1%

Source: Company filings available as of 12/31/20. 8 Consistent Track Record of Earnings Growth

2020 was our 17th Consecutive Year of Positive Comparable Store Sales Growth

Average: 5.6% 12.7% Strong Comp 14.7% 8.4% 12.3% 4.9% 5.4% 5.0% 5.2% 4.2% 5.3% 5.2% Performance 2.6% 3.6% 3.9% 0.8% 0.6% 0.2%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total Stores

347 380 Disciplined 293 316 237 265 Store Growth

2015 2016 2017 2018 2019 2020

Gross Margin % Strong and Consistent Annual Gross Margins Between 30.1% and 31.1% since 2010 Consistent 30.2% 30.6% 30.4% 30.4% 30.8% 31.1% Margins

2015 2016 2017 2018 2019 2020

Adjusted EBITDA (1) ($mm)

Track Record $223 $168 $135 $152 of Earnings $107 $121 Growth

2015 2016 2017 2018 2019 2020

(1) Beginning with the fourth quarter of fiscal 2020, we updated our definitions of non-GAAP financial measures to simplify our presentation and enhance comparability between periods 9 While Each Recession is Unique, Grocery Outlet Had Strong Comparable Store Sales Growth Performance in 2008-2009

Recessionary Conditions (2008 – 2009) 2-year stack Comparable Store Sales Growth of selected public retailers(1)

27%

(15%) (9%) (6%) (5%) (3%) (2%) 3% 4% 7% 8% 19%

Source: Company filings, company projections, publicly available information and FactSet. n = 184 (1) Reflects 2008 and 2009 comparable store sales growth stack for all U.S. retailers that were public during 2008 and 2009 and have reported comparable store sales growth figures for these years on FactSet. 10 Grocery Outlet Evolution: Over 70 Years of Delivering The WOW!

Signs first IO Berkshire Expands to Reaches$2 Publicly-listed Agreement in Partners invests Southern billion in sales Company Redmond, OR California market $2bn

Jim Readopens Eric Lindberg Acquires “Cannery Sales” and MacGregor Amelia’s and Read become expands to East 2019 Co-CEOs Coast 2018

2017

2014

2012

2011 th 2009 Hellman & Opens 300 2006 Friedman store in 1946 1973 invests Inglewood

11 Strong Commitment To Corporate Culture

Grocery Outlet is driven by family values that are reflected throughout the organization

Integrity Collaboration Entrepreneurship Performance

Our Mission: Touching Lives For The Better

12 INVESTMENT HIGHLIGHTS AND GROWTH STRATEGIES Investment Highlights & Growth Strategies

Investment Highlights Growth Strategies

POWERFUL CUSTOMER VALUE Be the First Choice for Bargain-Minded I PROPOSITION SUPPORTED BY A Customers Across the Country “WOW!” EXPERIENCE

FLEXIBLE SOURCING AND DRIVE COMPARABLE II DISTRIBUTION MODEL THAT IS STORE SALES GROWTH DIFFICULT TO REPLICATE

INDEPENDENT OPERATORS: OUR III “SMALL BUSINESS AT SCALE” MODEL EXECUTE ON STORE EXPANSION PLANS STRONG CONSUMER ENGAGEMENT IV AND ALIGNMENT WITH MACRO TRENDS

ATTRACTIVE AND CONSISTENT NEW IMPROVE PRODUCTIVITY AND REINVEST V STORE ECONOMICS SUPPORT IN THE VALUE PROPOSITION WHITESPACE

14 Our Fundamentally Different Approach To Buying and Selling

Small Business at Scale

How We Buy How We Sell  Opportunistic sourcing of quality, name-  Independently operated, local, small-box brand, fresh products stores

 Large, centralized purchasingteam  Personalized customer service  High community involvement  Long-standing, actively managed supplier relationships  IOs control store operations andoversee:  Proactive sourcing of on-trend products and  Product selection  Hiring, training and managingtheir  Everyday core staples to complement our store workers WOW! offerings  Local marketing

“Out Chain the Locals, Out Local the Chains”

15 Flexible Sourcing and Distribution Model Anchored by Purchasing Team and Relationships

…Who Make Us One of Long-Standing Suppliers… Their FirstCalls

RELATIONSHIP

BRAND PROTECTION

…And New EmergingSuppliers

EXECUTION

SCALE

16 Substantial Opportunity to Further Grow Opportunistic Supply

Significant Share Gain Opportunity Ongoing Secondary Market Growth

Secondary Market

17 Grocery Outlet’s Differentiated Sourcing Model Delivers Great Value To Customers

Two Primary Methods

Opportunistic Everyday Core Staples

 Opportunistic purchases  When staples, such as milk represent CPG excess or sugar, cannot be sourced inventory opportunistically, GO buys from suppliers  GO is a preferred CPG  Provides customer convenience partner for a non‐disruptive, brand- via a more complete protected sales channel product assortment ~50% of Purchases ~50% of Purchases  Allows GO to pass along  Products priced at or significant savings to below conventional customers while making a ’ and discount healthy margin competitors’ everyday prices

18 Favorable Value Proposition vs. Other Retailers

Basket Savings Further Differentiation

% Savings Across Store Relative to Competitors(1) BUT WITH NO CLUB STORES MEMBERSHIP FEE ~40% OR BULK SIZES!

DEEP BUT OFFERSLEADING ~20% DISCOUNTERS NATIONALBRANDS! Conventional Grocery Discount Grocery ACROSS A DOLLAR FULLGROCERY STORES ASSORTMENT!

AND WE PROVIDE AND IN AN EASY- EXTREME VALUE! TO-SHOPSTORE! BUT WITH FRIENDLY, ONLINE HIGH-TOUCH SERVICE!

(1) Savings vs. Conventional/Discount derived from Grocery Outlet’s pricing research as of June 2019 based on a blended basket of items from Safeway and for 5,000+ SKUs from multiple regions. 19 Unique Independent Operator Model Fuels Success

“Out Chain the Locals, Out Local the Chains”

Independent Operators

Operational GROCERY OUTLETBENEFITS Operational  Sourcing  Merchandising  Aligned economic interests  InitialPricing  Managinginventory  Recruitingand  Reduced fixed costs  Modifypricing trainingIOs  Locally drivenloyalty  Hiring and trainingstore  Real estate employees  Distributionand  Community and logistics IO BENEFITS customer service  Autonomy Financial Financial  Own inventory  Scale benefits  Wages (consigned to IOs)  Significant income  Local marketing  Regional marketing opportunity  Storeoperating  Rent expenses  Capex  Operating  CorporateSG&A workingcapital  Operatingassets

Collaboration with and amongst IOs enables real-time feedback and best-practice sharing for continual improvement 20 Compelling Store Economics For Both Grocery Outlet and Our Independent Operators

GO IO IO Model Reduces GO’s Fixed Cost Burden Upfront Investment Illustrative Expense Split

CapEx Buildout FixedCosts Inventory / Pre-Opening FixedCosts IO IO Assets / Working Capital Commission IO model reduces Illustrative Year-4 P&L fixed cost burden Sales $6.9 Gross Profit $2.1

COGS ex. Rent COGS ex. Rent Share of Gross Profit 50% 50%

Wages, Taxes, Benefits

Occupancy

"Traditional" Model IO Model

VariableCosts Fixed Costs

Note: Dollars in millions. 21 Selective Independent Operator Recruiting And Rigorous Training

Annual Leads: 20,000+

First Contact: Phone Screen & Initial Review

Considered: On-Site Executive Interviews

Selected: 70+

Enter 6 – 9 Month Aspiring Operator In Training Program

22 Centralized Marketing Coupled With Local IO Marketing Efforts

Enterprise Marketing Driven By Grocery Outlet Local Marketing Driven By IOs

Digital

Social Media Digital Ads WOW! Alerts In-Store Localization

Targeted Radio / Connected TV Influencer Promotions

Active Social Media Traditional Presence Print Radio Television

Community Involvement

23 Significant Whitespace Opportunity

Opportunity to establish additional ~1,500 “In-Market” and neighboring state locations Long term market potential to establish ~4,800 stores nationally

67 ~1,900

56 8

19 9 221 +5x Potential

380

As of In-Market and 1/2/2021 Neighboring State Potential

Source:eSite. 24 Note: Map figures as of January 2, 2021. Market Expansion Strategy and Success

Strong Presence in Southern CA Foundation For Growth in The Mid-Atlantic

 Market entry in 2012  Acquired Amelia's Grocery Outlet in 2011 (1)  86 stores in Southern CA  Goal: to accommodate supplier partners more effectively

Bakersfield

Harrisburg Philadelphia

Los Angeles

San Diego

25 (1) As of January 2, 2021. Attractive and Historically Consistent New Store Economics

Overview  We employ a blended underwriting model reflecting average economics across all urbanicities, geographies and store types

 New stores require average net cash investment of ~$2mm

 4 – 5 year store ramp until maturity

 Payback period of less than 4 years

 Recent cohorts have outperformed the new store model Year4

Sales ~$6,875

GO Four Wall EBITDAContribution ~$680 Model Assumptions % Four Wall EBITDA Margin ~10%

Cash-on-CashReturn ~35%

Note: Dollars in thousands. Cash-on-cash return defined as four-wall EBITDA divided by total initial net cash investment.

26 We Are Winning Through Constant Investments To Continually Strengthen Our Value Proposition

Talent Technology

27 FINANCIAL PERFORMANCE AND OUTLOOK Historical Financial Performance

Strong and Disciplined Track Record of Net Sales Growth Adjusted EBITDA Growth (1)

$223 20.0%

$3,135 $200

$168 16.0% $2,560 $152 $2,288 $150 $2,075 $135 12.0% $121 $1,832 $1,627 $107 $100 7.1% 8.0% 6.5% 6.6% 6.5% 66.6%.7% 6.6%

$50 4.0%

$0 0.0% 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020

Stores 237 265 293 316 347 380 Unit Growth 9% 12% 11% 8% 10% 10% (1) Beginning with the fourth quarter of fiscal 2020, we updated our definitions of non-GAAP financial measures to simplify our presentation and enhance comparability between periods Comp 4.2% 3.6% 5.3% 3.9% 5.2% 12.7%

Note: Dollars in millions.

29 17 Consecutive Years of Positive Comparable Store Sales Growth

14.7% Recessionary Economic 2004 – 2020 Average: 5.6% Conditions 12.3% 12.7%

8.4%

5.4% 4.9% 5.0% 5.2% 5.3% 5.2% 4.2% 3.6% 3.9%

2.6% 0.8% 0.6% 0.2%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

FY 2017 – FY 2020 Quarterly Comparable Store Sales Growth 2017 – 2020 Average: 6.8%

17.4% 16.7%

9.1% 7.9% 5.9% 5.3% 4.2% 4.2% 5.8% 5.8% 4.9% 5.1% 4.5% 4.1% 5.1% 2.7%

Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20

30 Q4 2020 Recent Developments

Fourteen WeeksEnded Y-o-Y Q4 Highlights January 2, 2021 Growth  Opened eight new stores ending the quarter with 380 stores in six states Stores 380 9.5%  Comp store sales increased by 7.9% over a 5.1% increase in the same period last year. Comp store Comparable Store sales increases continued to be driven by increases in Sales Growth 7.9% 280 bps average basket that were partially offset by declines in traffic  Adjusted EBITDA increased 24.7% to $51.2MM. Net Sales $806.8MM 23.1%

2021 Outlook

Adj. EBITDA $51.2MM 24.7%  Currently expects to open between 36 and 38 stores this year with one closure.  As of March 2, 2021, we expect Q1 comp store sales will decline negative HSDs reflecting the impact of Adj. NetIncome $24.2MM 46.1% cycling initial demand surge related to COVID-19 pandemic in March 2020.

Note: Dollars in millions.

(1) As of March 2, 2021.

31 Capital Structure

● Used IPO proceeds to repay in full its second lien Capitalization term loan (~$150mm) and prepay ~$250mm of its outstanding first lien term loann FY 2019 FY 2020 ● In October 2019, the Company prepaid additional Cash & Cash Equivalents $28 $105 $15mm of its outstanding first lien term loan ● In January 2020, repriced its first lien term loan at L+275bps, down from L+375bps originally Total Gross Debt $460 $460 ● In March 2020, the Company drew down $90mm from its revolving credit facility as a precautionary Net Debt $432 $345 measure in light of COVID-19 ● The entirety of this draw down was repaid on Adj. EBITDA $168 $223 May 26, 2020 ● No required principal payments until2025 Net Debt / Adj. EBITDA 2.6x 1.6x

Interest Coverage(1) Net Leverage (2)

5.5x 11.2x

2.9x 2.6x 3.7x 1.6x

2019 2020 Pre-IPO Post-IPO FY 2019 FY 2020

Note: Dollars in millions. (1) Defined as Adj, EBITDA / Net Interest Expense 32 (2) Defined as (Total Debt – Cash) / Adj. EBITDA. Long-Term Targets

Annual Unit Growth ~10%

Comparable Store SalesGrowth 1 – 3% annually

Adjusted EBITDA Stable as a % of Sales

Adjusted Net Income Growth Mid-teens %

33 APPENDIX FY 2020 Adjusted EBITDA Reconciliation

2015A 2016A 2017A 2018A 2019A 2020A Location on P&L

Net Income $5 $10 $21 $16 $15 $106

Interest expense, net 46 47 50 55 46 20 Interest Expense

Taxes 3 7 5 6 1 (20) Income Tax

Depreciation and amortization (a) 31 37 43 47 50 58 COGS/D&A

EBITDA $85 $101 $119 $124 $113 $165

Stock-based compensation (b) 0 3 2 10 31 38 SBC

Non-cash rent (c) 10 8 8 8 11 11 SG&A

Asset impairment and gain or loss on disposition (d) 1 1 1 1 2 2 SG&A

Provision for accounts receivable reserves (e) 1 4 3 1 3 (0.5) SG&A

Other (f) 6 4 2 7 9 8 SG&A

Adjusted EBITDA, revised definition $107 $121 $135 $152 $168 $223

Revised definition no longer adjusts for: SG&A

New store pre-opening expenses (g) 2 3 2 2 2 2 SG&A

Adjusted EBITDA, previous definition $108 $123 $136 $154 $170 $224

Note: Dollars in millions. (a) Includes depreciation related to our distribution centers which is included within the cost of sales line item in our consolidated statements of operations and comprehensive income. (b) Fiscal year ended amounts include non-cash share-based compensation expense and $0.4 million and $3.6 million of cash dividends paid in fiscal 2020 and fiscal 2019, respectively, in respect of vested options as a result of dividends declared in connection with our 2018 Recapitalization and our 2016 Recapitalization. (c) Consists of the non-cash portion of rent expense, which represents the difference between our straight-line rent expense recognized under GAAP and cash rent payments. The adjustment can vary depending on the average age of our lease portfolio, which has been impacted by our significant growth in recent years. (d) Represents impairment charges with respect to planned store closures and gains or losses on dispositions of assets in connection with store transitions to new IOs. (e) Represents non-cash changes in reserves related to our IO notes and accounts receivable. (f) Represents other non-recurring, non-cash or non-operational items, such as transaction related costs, including costs related to employer payroll taxes associated with equity awards, secondary equity offerings, store closing costs, personnel-related costs, legal expenses, debt extinguishment and modification costs, strategic project costs, and miscellaneous costs. 35 (g) Includes marketing, occupancy and other expenses incurred in connection with store grand openings, including costs that will be the IO’s responsibility after store opening. FY 2020 Adjusted Net Income Reconciliation

FY 2019 FY 2020

Net Income $15.4 $106.7

Stock-based compensation expenses (a) 31.4 38.1 Non-cash rent (b) 10.6 10.7 Asset impairment and gain or loss on disposition (c) 2.0 1.7 Provision for accounts receivable reserves (d) 2.6 (0.5) Other (e) 8.9 7.7 Amortization of purchase accounting assets and deferred financing costs (f) 11.9 11.8 Tax impact of option exercises and vesting of restricted stock units (g) (3.6) (44.1) Tax effect of total adjustments (h) (18.9) (19.5)

Adjusted Net Income, revised definition $60.3 $112.7

Revised definition no longer adjusts for:

New store pre-opening expenses (i) 1.5 1.5 Revised definition now adjusts for:

Tax impact of option exercises and vesting of restricted stock units (g) 3.6 44.1 Change in tax effect of total adjustments (h) (0.4) (0.4)

Adjusted Net Income, previous definition $65.0 $157.9

Note: Dollars in millions. (a) Fiscal year ended amounts include non-cash share-based compensation expense and $0.4 million and $3.6 million of cash dividends paid in fiscal 2020 and fiscal 2019, respectively, in respect of vested options as a result of dividends declared in connection with our 2018 Recapitalization and our 2016 Recapitalization. (b) Consists of the non-cash portion of rent expense, which represents the difference between our straight-line rent expense recognized under GAAP and cash rent payments. The adjustment can vary depending on the average age of our lease portfolio, which has been impacted by our significant growth in recent years. (c) Represents impairment charges with respect to planned store closures and gains or losses on dispositions of assets in connection with store transitions to new IOs. (d) Represents non-cash changes in reserves related to our IO notes and accounts receivable. (e) Represents other non-recurring, non-cash or non-operational items, such as transaction related costs, including costs related to employer payroll taxes associated with equity awards, secondary equity offerings, store closing costs, personnel-related costs, legal expenses, debt extinguishment and modification costs, strategic project costs, and miscellaneous costs.Represents other non-recurring, non-cash or non-operational items, such as transaction related costs, including costs related to employer payroll taxes associated with equity awards, secondary equity offerings, store closing costs, personnel-related costs, legal expenses, debt extinguishment and modification costs, strategic project costs, and miscellaneous costs. (f) Represents the amortization of debt issuance costs and incremental amortization of an asset step-up resulting from purchase price accounting related to our acquisition in 2014 by an investment fund affiliated with Hellman & Friedman LLC, which included trademarks, customer lists, and below-market leases. (g) Represents excess tax benefits related to stock option exercises and vesting of restricted stock units to be recorded in earnings as discrete items in the reporting period in which they occur. (h) Represents the tax effect of the total adjustments. Because of the increased impact of discrete items on our effective tax rate including the excess tax benefits from the exercise of stock options and vesting of RSU share-based awards, beginning in the fourth quarter of fiscal 2019, we changed our methodology to calculate the tax effect of the total adjustments on a discrete basis excluding any non-recurring and unusual tax items. Prior to the fourth quarter of fiscal 2019, the methodology we used was to calculate the tax effect of the total adjustments using our quarterly effective tax rate. 36 (i) Includes marketing, occupancy and other expenses incurred in connection with store grand openings, including costs that will be the IO’s responsibility after store opening.