Haggen announced on Sept. 24 that it asked a Delaware bankruptcy court for permission to close its grocery stores in the Tri-Counties, along with the entire Pacific Southwest.
The massive grocery chain, with roots in Bellingham, Wash., plans to close 100 stores, including all 20 in the tri-county region, to refocus on its core locations in Washington and Oregon, according to a news release.
After the grocer had trouble maintaining adequate stock and bringing in customers to its newly acquired stores, it cut hours and laid off employees – including 19 developmentally disabled workers. Haggen announced plans to close 22 locations in California and other states in August in order to “right-size” the company.
It then filed for Chapter 11 bankruptcy on Sept. 8 to keep its stores running but the $215 million it received in debtor-in-possession financing wasn’t enough to get it out of the hole. Haggen couldn’t find any potential buyers for the struggling stores since the bankruptcy announcement, the company said.
The Pacific Northwest-based grocer began with 18 stores and one standalone pharmacy before it took over 146 Albertsons and Safeway stores throughout California, Nevada, Arizona, Washington and Oregon. The expansion was part of an antitrust deal between Albertsons and Safeway and the Federal Trade Commission that would allow the companies’ $9.2 billion merger. Only 21 of those acquired stores remained profitable, according to the release.
“Haggen plans to continue to build its brand in partnership with its dedicated corporate support and store teams. Haggen has a long record of success in the Pacific Northwest and these identified stores will have the best prospect for ongoing excellence,” Haggen CEO John Clougher said in a release. “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.”
All of the employees throughout California, Nevada and Arizona will receive 60-day notices of the pending store and office closures, according to bankruptcy documents. Employees are supposed to receive their usual pay and benefits while the stores remain open, the company said.
The company is also working with Albertsons to waive an FTC order that banned the hiring of Haggen employees.
Haggen tried to pin its botched expansion on Albertsons with a $1 billion lawsuit, alleging that the grocer fed them inflated price data and sabotaged the inventory.
Albertsons filed a lawsuit against Haggen in July for $41 million in damages for allegedly not paying for inventory. A former Carpinteria employee is also suing the company for wrongful termination. There’s also a class-action complaint filed on behalf of the developmentally disabled workers.
“Haggen (plans to) continue its original mission of adding more fresh, local and exclusive items to the (21) new stores and expanding on its successful Pacific Northwest strategy,” the release said.
At its peak, Haggen had more than 165 stores. It will now have 37.
• Contact Alex Kacik at [email protected]