Grocery Outlet To Close Dozens Of Stores After Overexpansion

The Bay Area-based bargain grocer Grocery Outlet is closing 36 stores aft it expanded excessively fast.

The closures are portion of an optimization scheme that will target financially underperforming locations arsenic good arsenic a distribution halfway installation that’s nary longer successful use. The closures will spell into effect by nan extremity of this year, nan company’s main executive said successful an net telephone Wednesday.

Grocery giants Kroger and Albertsons besides closed respective locations past twelvemonth and laid disconnected hundreds of labor arsenic inflationary pressures deed consumers and rising labour costs tightened margins.

Kroger, nan genitor institution of California staples Ralphs and Food 4 Less, has been restructuring since a failed merger pinch Albertsons successful 2024.

Grocery Outlet Chief Executive Jason Potter did not opportunity location would beryllium layoffs associated pinch nan shop closures.

“Following a rigorous study of nan fleet, we identified 36 stores successful nan web that we concluded did not person a viable way to sustained profitability,” Potter said successful nan company’s latest net call. “It’s clear now that we expanded excessively quickly, and these closures are a nonstop correction.”

The institution is still readying to unfastened 30 to 33 caller stores this year. It reported a net loss of $225 cardinal for fiscal twelvemonth 2025, compared to a nett income of $39 cardinal successful 2024. Net income accrued 7.3% from 2024 to 2025.

In nan 4th fourth of 2025, nan institution reported a nett nonaccomplishment of $218 million. Shares person fallen much than 43% complete nan past year.

“We made advancement connected our strategical priorities successful 2025; however, our fourth-quarter results made clear that we person much activity to do,” Potter said.

Based successful Emeryville, Grocery Outlet and its subsidiaries person much than 560 stores successful 16 states, including California and Washington. Among nan 36 stores slated for closure, 24 are successful nan eastbound U.S. region.

Grocery Outlet locations are independently operated and geared toward affordability, targeting a value-seeking customer base. The concatenation has much than 100 locations in California, including respective successful nan Los Angeles area.

The company’s caller optimization scheme is intended to “strengthen semipermanent profitability and rate travel generation, amended operational execution, optimize our existing shop footprint and align pinch our disciplined caller shop maturation strategy,” nan company’s net merchandise said.

The institution estimated that its fiscal 2026 gross profit could beryllium negatively impacted by $4 cardinal to $6 cardinal owed to merchandise markdowns astatine stores marked for closure.