Safeway Closes 3 More Stores in 2026 as Albertsons Cuts Underperforming Locations

Safeway has closed at least three stores in 2026, including locations in California, Oregon, and Washington D.C. that operated for decades. Parent company Albertsons is restructuring its store portfolio after its planned $24.6 billion merger with Kroger was blocked by a federal judge in 2024. The closures reflect broader challenges facing grocery chains as they grapple with rising real estate costs and shifting consumer demand.

Why Safeway is closing stores

Safeway cited expiring leases as the primary reason for recent closures. The Hechinger Mall location in Washington D.C. closed on May 16 after 40 years because the lease was ending. The Hayward store in California’s Bay Area closed in late February, and the Newport, Oregon location at 2220 N Coast Hwy shut down in July after serving the community for 30 years. Safeway said it is reinvesting resources into other existing stores rather than renewing expensive leases.

Albertsons restructures after Kroger merger fails

Albertsons has been reviewing its store network since the federal judge blocked its $24.6 billion merger with Kroger in 2024. The company operates more than 900 Safeway locations primarily in the western U.S., plus smaller presence in Maryland, Virginia, and Washington D.C. Albertsons also owns Fred Meyer, Fry’s Food and Drug, Harris Teeter, Foods Co, Food 4 Less, King Soopers, Mariano’s, Pick ‘n Save, and QFC. Last year Albertsons closed at least 30 stores across its various banners, and the company continues cutting locations where it sees less long-term potential.

Broader grocery industry facing store closures

Safeway is not alone. Kroger announced in June 2025 that it would shutter 60 locations over 18 months, citing underperformance. Aldi is closing stores in Minnesota, Illinois, Texas, and Wisconsin while planning to expand to 3,200 locations by 2028. Grocery Outlet announced in March 2026 it would close 36 locations after CEO Jason Potter said the chain stretched itself too thin with rapid expansion. The industry faces headwinds from rising real estate costs and consumers shifting to discount grocers.

What this means for investors

Kroger (KR) trades at $56.25 with a Meyka grade of B+ and a 12-month forecast of $58.35, suggesting modest upside. Four analysts rate the stock a Buy, one rates it Hold, with consensus at 3.0. The stock has fallen 24.3% over the past year and trades at a PE of 11.37, below the market average. With Albertsons and Kroger both cutting underperforming stores, investors should monitor whether restructuring efforts stabilize margins and free cash flow.

Final Thoughts

Safeway’s store closures reflect Albertsons’ strategic retreat from unprofitable locations after the failed Kroger merger. Expiring leases and high real estate costs are driving the cuts. Investors in Kroger should watch whether industry consolidation and store rationalization improve profitability.

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