Oops! This grocer bit off more than it could chew

AUGUST 16, 2015 | BY MIKE TROY

Almost as quickly as tiny northwest grocer Haggen became a regional player by acquiring 146 former Safeway and Albertsons stores the company is retrenching and has plans to close a large number of stores.

Just six months after completing the acquisition of 146 former Albertsons and Safeway stores, Haggen announced plans to close 18 stores in California and Arizona and indicated other closures will be forthcoming. The company said the closure were necessary to improve its business and strengthen its competitive position and indicated it would close or sell additional locations in California, Arizona, Nevada, Oregon and Washington. It said most of the stores being closed or sold were acquired as part of the transaction in which Albertsons and Safeway divested 146 stores as part of their merger to satisfy Federal Trade Commission antitrust concerns.

Over the next 60 days, Haggen said it plans to close eight locations in Los Angeles, six in San Diego and one each in Bakersfield and Santa Barbara. Three stores in Phoenix and two in Tucson are slated for closure as part of the initial round of 18 closings. Additional stores will be sold or closed in the future as part of Haggen’s right-sizing strategy, however the company did not provide further detail on the total number of closures.

“Haggen’s goal going forward is to ensure a stable, healthy company that will benefit our customers, associates, vendors, creditors, stakeholders as well as the communities we serve,” said Haggen CEO Pacific Southwest Bill Shaner. “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.”

John Clougher, Haggen CEO Pacific Northwest, added, “Though Haggen has grown substantially, we remain committed to our core values and to supporting regional farms, ranches and food producers and strengthening the communities around our stores.”

When the deal was first announced it raised eyebrows because it is unusual in the retail industry for a chain of only 18 stores acquire a retail operation eight times larger.

“This momentous acquisition is a once-in-a-lifetime opportunity to rapidly expand the Haggen brand across the West Coast,” John Caple, chairman of the Haggen board of directors and partner at Comvest Partners, the private equity firm that owns the majority of Haggen said at the time. “Now that the deal has closed, our team is focused on seamlessly converting these 146 stores to the Haggen brand over the next five months.”