VA Grocery Chain Planning Dozens Of Store Closures

Discount supermarket chain Grocery Outlet, which has three stores in Virginia, plans to close dozens of locations as it charts a path out of financial difficulties stemming from recent expansion efforts.

The grocer on Wednesday announced it plans to close 36 underperforming stores over the next year as part of an "optimization plan."

"We identified 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 the stores slated for closure, 24 are located in the eastern United States, where the retailer has recently expanded. Currently, Grocery Outlet has locations in Falls Church, Portsmouth and Virginia Beach.

• Related: Falls Church Welcomes New Grocery Outlet Location

"It's clear now that we expanded too quickly, and these closures are a direct correction," Potter said.

Grocery Outlet has 570 stores across 16 states. 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.

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; however, 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.

Kroger announced plans last year to close 60 stores.

In January, Amazon said it would close every single one of its Amazon Fresh and Go stores nationwide. Some of its Virginia locations could be repurposed into Whole Foods Markets.