The setback underscores the difficulties the Bellingham-based grocer has faced in breaking into new markets where it was virtually unknown. Only one Washington store is affected.
Haggen said Friday it will close or sell 27 stores in California, Arizona, Nevada, Oregon and Washington, the latest and biggest sign of its struggle to fit into a vastly larger footprint.
Most of the jettisoned stores are among the 146 that Bellingham-based Haggen bought from Albertsons and Safeway after their merger earlier this year. The move will bring Haggen’s locations down to 137 from 164.
The only Washington store affected is Spanaway, near Tacoma.
“By making the tough choice to close and sell some stores, we will be able to invest in stores that have the potential to thrive under the Haggen banner,” said Bill Shaner, the executive who leads Haggen’s Pacific Southwest operations, in a statement.
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He said the company’s goal now is “to ensure a stable, healthy company that will benefit our customers, associates, vendors, creditors, stakeholders as well as the communities we serve.”
The majority of closures will be in the L.A. and San Diego areas, but five stores will close in Oregon and another five in Arizona. The shutdown process will begin over the next 60 days, the company said.
Haggen, which specializes in organic and local products, said additional stores “will be sold or closed in the future as part of Haggen’s right-sizing strategy.” It’s unclear how many jobs will be affected, the statement said.
The retreat, just a few months after an expansion that multiplied its number of stores ninefold and quintupled its head count, underscores the difficulties Haggen has faced in breaking into new markets where it was virtually unknown.
Last month the company began making major cuts to worker hours in the Seattle area, and undertook hundreds of layoffs and work-hour reductions in California, Arizona and Nevada.
Haggen was also sued for $41.1 million by Albertsons, which alleges that Haggen didn’t pay for part of the inventory that came with the stores. Haggen says the lawsuit came in response to its own allegations that Albertsons violated the purchase agreement for the stores.
Haggen, owned by Florida-based private equity firm Comvest, saw the Safeway-Albertsons deal as a unique opportunity for the grocery chain to carve a big presence in California, one of the nation’s most competitive grocery store markets.
Regulators thought Haggen’s entrance could help keep competition alive in the wake of the big Albertsons-Safeway merger. The U.S. Federal Trade Commission gave its blessing for the acquisition after reviewing Haggen’s plans, sources of distribution and financial backing, said Dan Ducore, the agency’s assistant director for compliance, in an interview after Haggen announced the work-hour reductions. Its plan “made a lot of sense,” he said.
Ducore said the agency’s job isn’t to pick winners or losers, and that in general these types of store purchases by a third party after a major supermarket merger work out. “I hope this is sort of a bump in the road for them,” he said.