Haggen plans to close 100 more stores and leave the Southwest

Haggen announced plans to close 100 more grocery stores—including all its Southwest stores—to focus on 37 stores and one standalone pharmacy in the Northwest. The closures are part of the company’s chapter 11 bankruptcy process.

It’s the Bellingham grocer’s latest setback in a string of disappointments. The supermarket chain bought 146 former Albertsons stores in five West Coast states earlier this year and quickly started losing money in its new territory.

Under the plan to reorganize, Haggen wants to keep 16 of its legacy stores in the Northwest, the pharmacy and 21 stores acquired in the Albertsons deal.

Haggen doesn’t plan to close any stores in Whatcom County but 14 Washington state stores are on the list, including locations in Aberdeen, Liberty Lake, Tacoma, Monroe, Silverdale, Burien, Bremerton, Milton, Everett, Shoreline, Gig Harbor, Port Orchard and two in Renton.

Five stores in Arizona, 75 in California, and seven each in Nevada and Oregon are targeted for closure. The stores will remain open through the liquidation process, the company said in a press release.

Haggen will notify employees at the closing stores and a support office 60 days before the stores close, the press release said.

The move will affect thousands of workers. A company spokesperson couldn’t say how many, but the company added more than 8,000 new employees when it grew from 18 stores to 164 earlier this year.

Haggen plans to sell all property, inventory and furnishings in the closing stores, but it needs court approval to start.

Haggen urged the court to act on Thursday. “It is imperative that these sales commence immediately,” the company said in documents filed Thusday in U.S. Bankruptcy Court in Delaware.

The unsuccessful stores are bleeding about $11.1 million from Haggen’s budget every month, according to court filings. Haggen expects store sales to yield about $125.6 million—a cash infusion that the company called “necessary and significant,” in court filings.

After a bidding process, the struggling grocery chain picked Hilco Merchant Resources to manage the store closures. Hilco is currently working on closing 27 Haggen stores from an earlier phase of downsizing. Those stores should all be closed by the end of September, according to court documents.

A Haggen spokesperson couldn’t comment on whether the company plans to close more stores in the future.

All the closing stores but one, in Aberdeen, Wash., are stores that Haggen bought from Albertsons this year. Albertsons sold the stores to get Federal Trade Commission approval on its $9 billion merger with Safeway.

Haggen began rebannering Safeway and Albertsons stores throughout the West Coast in February. Pricing and stocking problems surfaced almost immediately. In August the company announced plans to close 27 stores, and it filed for bankruptcy on Sept. 8.

Haggen blamed the fiasco on Albertsons, alleging in a $1 billion lawsuit that Albertsons sabotaged Haggen’s entry into new territory.

Haggen is also facing a $41 million lawsuit from Albertsons, which says Haggen didn’t pay for some inventory it acquired in the deal, as well as a lawsuit from the union that represents Haggen workers and another from a former employee.

Oliver Lazenby, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or olazenby@bbjtoday.com


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