Today, Haggen Food and Pharmacy filed a voluntary Chapter 11 petition with the intent to reorganize around what they are terming a “reduced portfolio of locations”.
So, to quickly recap a story I started discussing just a few weeks back:
• The company had already announced the closure of 26 stores a few weeks back. At that time, they indicated that more closures could be in the offing;
• They are suing Albertsons for over $1 billion. In their complaint, Haggen alleged that following its purchase of 146 Albertsons and Safeway stores, Albertsons engaged in “coordinated and systematic efforts to eliminate competition and Haggen as a viable competitor.”
• And now, a voluntary bankruptcy filing with plans to market a significant number of locations. There is financing secured that will allow the business to continue to run during this period. Coinciding with this announcement, one of their co-CEO’s, Bill Shaner has left the company.
To call this situation a mess would be a charitable assessment. This was an acquisition that probably shouldn’t have happened, at a hefty $9 billion price point with unrealistic expectations over the complexity of an 18 unit chain acquiring 146 stores, many of which were in a separate geographic market.
For a litany of reasons, the acquisition didn’t work. Now, there will be legal squabbles to assign blame as well as the task of selling off more stores. This could lead to another reshaping of the market, particularly in California, which has two major players in Albertsons and Kroger (under various banners) and a host of excellent independents and specialty chains.
Hopefully, Haggen can emerge out of this as what it should be, a regional competitor in reduced geography operating a manageable number of stores. Given all of the complexities and legal filings, a clear picture may not emerge for several more months.
As I said in our very first post on this subject, this was no way to “eat an elephant”. A painful retail lesson is once again learned.