Table of Contents
NEW YORK — Haggen Inc. asked a bankruptcy court last month to approve its plan to sell 100 grocery stores as it retreats from Southern California, Arizona and Nevada.
Haggen Inc. asked a bankruptcy court last month to approve its plan to sell 100 grocery stores as it retreats from Southern California, Arizona and Nevada.
No third party is likely to make an offer for the stores, Haggen stated in a court filing.
Shortly before filing for bankruptcy protection earlier in the month, Haggen said it would close or sell 27 stores, 26 of which were among the 146 that the Bellingham, Wash.-based company acquired last year from Albertsons, which was required by the Federal Trade Commission to divest the stores in order to consummate its takeover of Safeway.
Haggen intends to regroup around 37 "core" stores in the Pacific Northwest, consisting of 16 of its original 18 stores and 21 of the stores it bought from Albertsons. It will also retain a stand-alone pharmacy from its original footprint.
"Although this has been a difficult process and experience, we will remain concentrated in the Pacific Northwest, where we began, focusing on fresh Northwest products and continuing our support and involvement in the communities we serve," remarked John Clougher, chief executive officer of Haggen Pacific Northwest.
Haggen’s bid to extend its brand failed to gain traction in part because the chain’s prices were deemed too high and partly because it was slow to build a brand awareness in the new markets, industry analysts noted. In the face of underwhelming store traffic, Haggen officials began laying off workers in California last summer and paring hours for others.
It also parted ways with Bill Shaner, who was hired in December to lead the expansion into the Southwest as one of the company’s two CEOs, alongside Clougher.
As part of its bankruptcy proceedings, Haggen proposed selling $12 million in assets back to Albertsons, including more than $3 million in inventory and nearly $9 million in "records and goodwill," including customer records and profiles related to pharmacy operations.
Haggen told the court it is bleeding cash and wants to begin closing the stores right away, possibly saving as much as $60 million through the end of the year.
Haggen also asked the court to authorize retention payments averaging about $7,000 to 231 key employees, including store and pharmacy managers, so they stay through the closings.
Haggen has 5,140 employees in California, Nevada and Arizona, where it is closing all of its stores. In a memo to employees, Haggen stated that it was working with Albertsons to take back some of its former workers.
