diff --git a/gnu/packages/compression.scm b/gnu/packages/compression.scm
index 4e0d4e9196..3edaecd951 100644
--- a/gnu/packages/compression.scm
+++ b/gnu/packages/compression.scm
@@ -876,7 +876,7 @@ (define-public squashfs-tools
              "LZO_SUPPORT=1"
              "LZ4_SUPPORT=1"
              "ZSTD_SUPPORT=1"
-             (string-append "INSTALL_DIR=" %output "/bin"))
+             (string-append "INSTALL_DIR=" (assoc-ref %outputs "out") "/bin"))
        #:phases
        (modify-phases %standard-phases
          (replace 'configure