retail news in context, analysis with attitude

The San Diego Union-Tribune reports that the initial auction of Haggen stores being sold off after the company went into bankruptcy because of its disastrous expansion into California, Arizona and Nevada, was "spirited" and "saw the grocer offered roughly $5 million more than originally proposed, according to lawyers who attended."

According to the story, "More than 200 lawyers, creditors and investors attended the auction in Los Angeles, said James Hill, an attorney with San Diego-based Sullivan Hill Lewin Rez & Engel, which represented a seller ... In many cases, initial bids were far exceeded. A Chula Vista store on Telegraph Canyon Road received a bid from Carnival Supermarket earlier this month for $600,000 but was offered $2.1 million at auction to Tawa, owners of Asian-themed grocery chain 99 Ranch Market.

"An initial bid of $295,000 by Smart & Final for a North Park store on University Avenue ended up going to the grocer for $2.4 million in back-and-forth bidding with Orchard Supply Hardware. Multiple bidders led to a La Mesa store tentatively selling for $1.56 million to Albertsons — $1.16 million more than its initial bid."

According to the story, "The senior director of the Cushman & Wakefield brokerage firm, John Jennings, said he was not surprised the stores did well at auction because vacancy rates for big box stores are so high in the county that it can be a barrier to expansion. He said it would normally be next to impossible for the bidders to get the locations."

The stores are being auctioned because the 18-store Haggen decided to expand into a 164-store chain by acquiring units being sold off because Albertsons was buying Safeway and the government required it for "competitive" reasons. That expansion was driven by the equity group that owns Haggen, Comvest, and was nothing short of a debacle, and now the company is selling off those stores, and even laying the groundwork for going out of business by getting the court's permission even to sell the original 18 stores.
KC's View:
There are a lot of folks who will read this story and be disgusted, thinking that this is just another case of the money guys doing just fine even as their misguided retail adventurism ends up costing a lot of people their jobs.

Count me among them.

The only upside is that this is a very good opportunity for well-run retailers like Smart & Final to expand judiciously ... Smart & Final is the kind of retailer that has vision, and story and the ability to implement effectively.