Haggen announced Thursday the grocer will be bailing officially from Santa Barbara County — and the entire Pacific Southwest market — to focus around its 37 most profitable stores closer to its home base in the Pacific Northwest.
The writing was already on the wall for the Bellingham, Wash.-based grocery chain, which filed for bankruptcy protection from creditors to maintain operations earlier this month to regroup after biting off more than the retailer could chew.
Haggen grew its 18 regional store locations to 164 earlier this year when Haggen picked up 146 stores across five states from AB Acquisition LLC and Safeway Inc., the entity created when Safeway (owner of Vons) merged with Albertsons.
After months of struggling to find foothold in new markets, Haggen announced it would be closing or selling some 26 stores — many of them acquired in the deal with Albertsons.
In a news release, Haggen said it intends to exit from the Pacific Southwest market entirely to realign operations around core stores — 16 original locations, one stand alone pharmacy and 21 stores acquired in the 2015 Albertson’s deal — and is continuing to explore market interest for locations in California, Arizona, Oregon, Washington and Nevada.
That’s what the company is asking for in the Chapter 11 process, at least.
Company spokeswoman Deborah Pleva said all the core stores were in Oregon and Washington, with a full list of impacted stores expected to be posted late Thursday.
Haggen is also asking for approval to start “store closing sales” and to give employees at impacted stores a 60-day notice of pending store and office closure.
All stores are supposed to remain open during the process, with employees receiving pay and benefits as usual, the company said.
Shelves were already emptying without regular inventory replacement at some of the six former Albertsons and Vons stores converted in Santa Barbara County.
Pleva said Haggen’s original stores saw sales gains, with 21 newly acquired ones finding footing.
“Haggen plans to continue to build its brand in partnership with its dedicated corporate support and store teams,” Haggen CEO John Clougher said in a statement.
“Haggen has a long record of success in the Pacific Northwest and these identified stores will have the best prospect for ongoing excellence. 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.”
Haggen previously said it has received commitments for up to $215 million in debtor-in-possession financing from its existing lenders to maintain operations and the flow of merchandise to its stores during the sale process.
Haggen is also working to continue paying vendors, employee wages, certain benefits and customer programs during the restructuring.
The company is also continuing to work with Albertsons in its request for the Federal Trade Commission to waive the restriction in the FTC order banning the hiring of Haggen employees.
Haggen has blamed its failure on Albertsons in a $1 billion lawsuit, which alleges the fellow grocer sabotaged its entrance into new markets by providing false retail data for pricing, taking store inventory and more.
Since expanding, Haggen has cut employee hours and laid off workers at some of its stores.
The company is also facing several lawsuits, including wrongful termination of a former employee at the Carpinteria Haggen, workers rights’ violations and a class-action complaint for letting go 14 developmentally disabled employees.
— Noozhawk staff writer Gina Potthoff can be reached at gpotthoff@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.