Grocery Outlet to Shutter 36 Underperforming Stores, Including Hagerstown Location, in Strategic Pullback

In a significant strategic shift, Grocery Outlet Holding Corp. announced plans to close 36 underperforming stores across its network. The move represents a direct pullback from the discount retailer's recent aggressive expansion strategy.

The list of closures includes the store at 1713 Massey Blvd. in Hagerstown, Maryland. While the company is not exiting any state entirely, the decision underscores the challenges of scaling a regional business model nationally.

"Our belief in the long-term opportunity in the East remains, but it's clear we expanded too quickly," said President and CEO Jason Potter during a recent investor call. "These closures are a necessary correction to strengthen our overall footprint."

The retailer's growth had been rapid, opening 42 new locations and closing only five in 2025 alone, ending the year with 570 stores across 16 states. However, this pace came at a cost. Potter admitted the company's fourth-quarter results were "unacceptable," noting there is "more work to do than we expected."

Despite the retrenchment, Potter highlighted a silver lining: the remaining 51 stores in the Eastern U.S. have been profitable, posting a 3.3% sales increase in Q4. The company expects the closures to boost adjusted earnings before interest, taxes, and depreciation (EBITDA) by approximately $12 million, refocusing resources on healthier markets.

The announcement reflects broader turbulence in the grocery sector, where discount chains face intense competition from giants like Walmart, Aldi, and expanding dollar stores, all while consumers remain price-sensitive.

Community and Analyst Reaction

Michael Torres, Retail Analyst at Brenner Capital: "This is a prudent, if painful, move. Grocery Outlet's model relies on opportunistic buying and deep community ties. Overexpansion diluted that advantage. Streamlining lets them protect margins and refocus on core, profitable markets."

Linda Chen, Hagerstown Resident: "It's really disappointing. This was my go-to for affordable organic produce and unique finds. For families on a budget, options are shrinking. It feels like another service leaving our community."

David R. Miller, Former Store Manager (Mid-Atlantic Region): "The writing was on the wall. Corporate pushed for growth without adequate local market research or support. They set up stores to fail from the start. It's a waste of investment and, more importantly, it disrupts employees' lives and hurts shoppers who relied on them."

Sarah Johnson, Small Business Owner: "While sad for the employees, it might help the remaining stores get better inventory. Sometimes consolidation is needed for long-term survival."

Delaware News Journal reporter Shannon Marvel McNaught contributed to this report.

This article is based on original reporting from The Herald-Mail.