retail news in context, analysis with attitude

The Seattle Times reports this morning that Haggen "pans to surrender most of the territory it acquired in its ambitious bid to become a West Coast grocery powerhouse, judging by financial projections it made in bankruptcy court that paint the Bellingham grocer shrinking to one third of its current size by early November."

Indeed, some sources tell MNB that the plan is to sell virtually every one of the stores that made up its Pacific Southwest division, that were acquired when Albertsons bought Safeway and had to divest stores.

According to the Times story, "In a court filing, Haggen chief financial officer Blake Barnett said that the 17 grocery stores that were run by Haggen before its acquisition were profitable, to the tune of $25 million in annual earnings before interest, taxes, amortization and depreciation. Those locations, combined with 'some' of the newly-acquired stores, will 'ultimately form a set of successful core stores' that the company will restructure itself around, Barnett said."

The story also notes that "Haggen’s creditors committed $215 million to get the company through the bankruptcy. As of Sept. 11, the company was estimated to have $272,000 in the bank, not counting proceeds from the credit facility provided by the lenders after the bankruptcy filing." As a result of its cash flow problems, Haggen was said to be dealing with a severe cutback in shipments by manufacturers, which was creating significant out-of-stock issues, which was hurting sales even more.

Haggen has sued Albertsons for more than $1 billion, accusing the company of systematically sabotaging its efforts to operate the stores effectively.
KC's View:
Lots of people are going to lose their jobs, I'd guess, because it is hard to believe that supermarkets will end up being put into all these Haggen locations. I'd also guess that in some cases where supermarket companies do acquire locations, they may go dark for a while since non-union retailers will have to satisfy California law before reopening them.

It is just a mess. Frankly, the Haggen name now is tainted ... and it is hard to imagine that the brand has any sort of long-term future ... unless they're somehow able to accomplish some sort of miracle. And miracles are in short supply.