California-based Grocery Outlet plans to close dozens of its supermarkets as it charts a path out of financial difficulties.
The Emeryville-based grocer on Wednesday announced it plans to close 36 stores over the next year as part of an “optimization plan.”
“We identified 36 stores in the network that we concluded did not have a viable path to sustained profitability,” CEO Jason Potter said on the company’s quarterly earnings call.
Of those 36 to-be-closed stores, 24 are located in the eastern part of the U.S., where the retailer has recently expanded.
“It’s clear now that we expanded too quickly, and these closures are a direct correction,” Potter said.
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Grocery Outlet has 570 stores across 16 states. Around half of its locations are located in California. Grocery Outlet is a discount grocery chain with a unique independent operator business model, which differs from typical franchises in that store managers profit-share with the company based on the store’s performance over time.
The company has not identified where the 36 stores set to close are located. It’s possible that some of the 12 non-eastern stores set to close are located in California.
Despite the planned closures, Grocery Outlet is also set to open new locations.
The company will open “another 30 to 33 net new stores in 2026,” Potter said.
“We plan to expand with a more clustered model to improve supply chain efficiency and marketing leverage,” he said.
Grocery Outlet saw net sales increase during the last quarter, up around 11% compared to the same time the year before. But it recorded an operating loss of $234.8 million.
Potter said increased consumer pressure and competition, along with disruptions to government assistance programs during last year’s government shutdown were partly to blame.
Grocery Outlet isn’t the only supermarket company eyeing closures.