(Reuters) - Grocery chain Sobeys Inc [SOBEF.UL] plans to close its underperforming stores and lay off employees after its C$5.8 billion acquisition of rival Safeway Inc’s Canadian arm, the Global and Mail reported on Wednesday.

"After the acquisition of Safeway, we did a thorough review of our store network across the country ... We identified a number of underperforming stores and we have made the decision to close those stores," Sobeys spokesman Andrew Walker told the newspaper. (bit.ly/1ixbO9F)

Sobeys, owned by Empire Co Ltd, is expected to close about 50 to 60 stores, the Canadian newspaper reported, citing industry sources.

Reuters could not immediately reach Sobeys for comment outside regular business hours.

The company cemented its position as Canada’s No. 2 grocer with the acquisition of Safeway Canada, which added C$1.62 billion to Empire’s total sales in the third quarter.

Wal-Mart Stores Inc and Target Corp have expanded in Canada over the past year, challenging Canadian retailers such as Loblaw Cos Ltd and Empire.

Empire is expected to report its fourth-quarter results on Thursday.