Grocery chain Haggen leaving California
Haggen Inc. is leaving California after a dramatic expansion gone wrong forced the grocery chain to file for bankruptcy protection this month.
The Bellingham, Wash., company said Thursday that it is closing all its stores in the state as part of a larger exit of its Pacific Southwest holdings, including in Arizona and Nevada. That would affect at least 100 outlets, with 67 in California. That follows the closure of 27 stores announced last month, including 16 in the Golden State.
Stores in Poway, Rancho Bernardo and Rancho Penasquitos will close as part of the corporate pullback.
Haggen plans to keep 37 stores in Washington and Oregon, which is its home base.
“Although this has been a difficult process and experience, we will remain concentrated in the Pacific Northwest where we began,” Chief Executive John Clougher said.
Haggen has been struggling since paying what analysts estimated was more than $1.4 billion for 146 Albertsons, Vons, Pavilions and Safeway grocery stores. Albertsons and Safeway were ordered by federal regulators to divest those locations last year as part of their merger.
With one bold stroke, Haggen radically expanded from an 18-store chain in the Pacific Northwest to a regional West Coast player. The company spent the early part of the year converting its new stores to the Haggen brand, promising high-quality meat, seafood and organic produce at low prices. But the chain failed to catch on as shoppers complained about the selection and prices.
A majority of Haggen is owned by Florida-based investment firm Comvest Partners. By closing the additional locations, the company estimates it can save about $57.4 million for the rest of the fiscal year, and make an additional $125.6 million by liquidating the stores, according to a Bankruptcy Court filing.
Haggen said it planned to liquidate merchandise and furnishings. Haggen warned that it was unlikely that buyers would make firm offers for the stores “as a going concern.” But analysts predict that most locations will remain supermarkets, given the stores’ sizes and equipment inside.
The company filed for Chapter 11 bankruptcy protection this month in the U.S. Bankruptcy Court for the District of Delaware. Haggen said it had received as much as $215 million in financing commitments from its existing lenders to keep its operations running.
The company did not announce how many employees would be affected by the closing, but union leaders estimate that about 8,000 workers could be affected in California alone.