Why Grocery Outlet is closing some stores in California

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In these tough times, some discount chains have been thriving, but California’s Grocery Outlet has been closing stores as it tries to remedy a hangover of overexpansion.The Emeryville-based company earlier this month announced plans to close 36 underperforming stores nationwide because of overexpansion by the end of the year.Nine of those will be in California.Grocery Outlet did not say which stores would close, but the advisory firm Gordon Brothers, the chain hired to handle its leases, listed 36 stores “available for sublease.”Six Southern California stores appeared on the list: Azusa, Brawley, El Cajon, La Habra, Ontario and Poway.

In Central California, the Kerman, Patterson and Ridgecrest stores are expected to close.No stores in Northern California appeared on the list.

Grocery Outlet did not respond to interview requests.The company has not said if there will be layoffs associated with the closures.

Outside California, Grocery Outlet appears to be closing eight stores in Maryland, six in New Jersey and six in Ohio, as well as a few in Pennsylvania and Idaho.The company does not plan to fully exit any state.

Grocery Outlet still plans to open more than 30 stores in 2026.It has had a tough year, reporting a net loss of $225 million for fiscal year 2025, compared to a net income of $39 million in 2024.

“Our outlook for 2026 reflects a business that has more work to do than we expected,” Grocery Outlet Chief Executive Jason Potter said on an earnings call earlier this month.Grocery Outlet is hoping to turn things around by closing struggling stores to focus on building clusters around its high-performing ones, said Catherine Douglas Moran, an editor at the trade publication Grocery Dive.

The company apparently got ahead of demand for its brand in an effort to cater to investors’ growth mindsets, Moran said.The closures in Cincinnati and Hazlet, N.J., indicat...