Grocery Outlet, a discount supermarket chain with multiple locations in Maryland, is set to close several stores as it navigates financial challenges linked to its recent expansion efforts.
On Wednesday, the company revealed plans to shut down 36 underperforming stores over the next year as part of an “optimization plan.”
CEO Jason Potter stated during the company’s quarterly earnings call, “We have identified stores within our network that we believe do not have a sustainable path to profitability.”
Among the stores scheduled for closure, 24 are situated in the eastern United States, where the retailer has recently expanded. Currently, Grocery Outlet operates 15 locations in Maryland.
“It has become evident that our rapid expansion was too ambitious, and these closures are a necessary adjustment,” Potter remarked.
With a total of 570 stores across 16 states, Grocery Outlet employs a distinctive independent operator business model. This model differs from traditional franchises, allowing store managers to share in profits based on their store’s performance over time.
Despite the impending closures, Grocery Outlet plans to launch new locations, with “another 30 to 33 net new stores expected to open in 2026,” according to Potter.
“Our strategy is to expand using a more clustered model, which will enhance supply chain efficiency and marketing effectiveness,” he added.
In the last quarter, Grocery Outlet experienced a net sales increase of approximately 11% compared to the previous year, although it also reported an operating loss of $234.8 million.
Potter attributed some of these challenges to heightened consumer pressure and competition, as well as disruptions to government assistance programs during last year’s government shutdown.
Grocery Outlet is not alone in its decision to close stores; Kroger announced plans last year to shut down 60 stores.
In January, Amazon revealed it would close all of its Amazon Fresh and Go stores nationwide, with some locations in Maryland potentially being converted into Whole Foods Markets.
