California-based Grocery Outlet Holding Corp announced plans to close 36 underperforming stores to improve operational performance and strengthen long-term profitability. The move follows the company’s fourth-quarter and full-year 2025 financial results.
Closures Part of Operational Optimization Plan
Grocery Outlet Holding Corp announced its financial results for the fourth quarter and full fiscal year ended January 3, 2026. It adopted an Optimization Plan on March 2 after reviewing the financial and operational situation of the store fleet.
The grocery brand noted that it plans to shut down 36 financially unprofitable stores and terminate or sublease a distribution center lease that is no longer being used. It also plans to end the operator agreements with independent operators at store locations that were affected.
The closures are expected to be completed during the fiscal year of 2026. It is estimated, by the company, that it will incur restructuring costs of $14 million to $25 million in relation to the plan. It also includes expenditure of $51 million to $63 million, primarily for the lease termination fees.
Moreover, it will include $11 million to $14 million in bad debt expense. About $48 million to $52 million will be incurred in non-cash write-offs related to lease assets and liabilities. The gross profit in 2026 is expected to fall by $4 million to $6 million. This will occur after the firm discounts the inventory to slow down operations at the closing stores.
Discount Retailer Continues Expansion Strategy
Grocery Outlet Holding Corp. will continue expanding its network despite the closures. It plans to launch 30-33 new stores in 2026, barring the locations that were impacted by the optimization plan. The retailer had opened 42 new stores in 2025 and shut down five, with its total number coming down to 570 in 16 states.
The grocery chain added seven new stores in the fourth quarter and closed none. The company said the optimization plan aims to focus on value and improve in-store experience as it redefines its growth strategy.
Mixed Performance Reported in 2025 Results
According to Grocery Outlet Holding Corp, the company reported net sales of $1.22 billion during the fourth quarter of 2025. It is an increase of 10.7% from last year, including $82.4 million from an extra 53rd week in the reporting period. However, the comparable store sales fell by 0.8%.
The firm revealed an operating loss of $234.8 million, pushed primarily by $110.2 million in non-cash impairment of long-lived assets and $149 million in goodwill impairment. Total net loss for the quarter came to $218.2 million, as compared to the net income of $2.3 million in the prior year period.
The company reported a net sale of $4.69 billion in 2025 with a growth if 7.3% year-over-year, while the comparable sale rose by 0.5%. However, the company recorded a net loss of $224.9 million compared to the net income in 2024. The retailer is expecting net sales between $4.60 billion and $4.72 billion.
Looking ahead to fiscal 2026, the retailer expects net sales between $4.60 billion and $4.72 billion, comparable store sales ranging from a 2% decline to flat growth, and adjusted EBITDA between $220 million and $235 million.
As it moves forward with store closures and strategic adjustments, Grocery Outlet plans to focus on delivering stronger value to customers and refreshing stores.
