Haggen to close, liquidate 100 more stores

[marshd1000]

Here is a interesting interview with a representative of the FTC:

http://www.signalscv.com/section/24/article/144436/

[klkla]

Here is a interesting interview with a representative of the FTC:

http://www.signalscv.com/section/24/article/144436/

Thanks for the link. Interesting to read it from the FTC's point of view. Sounds like they should have pushed back when the deal was originally presented to them, though. Almost everyone was skeptical that Haggen's plan could work and they should have been, as well.

Hopefully they are investigating Albertsons. I thought I had read someplace else that they were.

[storewanderer]

Another good write up:

http://obrag.org/?p=100732

[SamSpade]

I happened to need to travel through Baker City, Oregon so I snapped some photos of the Haggen there. As I pointed out in a previous post, this store is newer and larger than the Safeway across the street. It will be interesting to see if Baker County can find another grocery tenant besides someone like Grocery Outlet running as an independent. Bi-Mart next door and Safeway were both busy. You can see how busy Haggen was. The "Store Closing" banners were up because the liquidation was starting the next day.

Pharmacy records were not sold to Safeway but instead to the adjacent Rite-Aid. Not sure why Bi-Mart didn't go for them.

There was so much in the store, it made me sad to think how much of that fresh produce will end up getting discarded. I hope they can at least donate it to the local food pantry for use.

[SamSpade]

2 more photos:

[Super S]

It's a shame seeing the former Baker City Albertsons like that. I stopped there while passing through in 2009 and that was a very nice store, I don't quite understand how this one ended up going to Haggen while they kept the older Safeway nearby. I don't think that, even under the best circumstances, that this location would have lasted very long as a Haggen. This just isn't the right area for an upscale type of store.

[storewanderer]

Since Albertsons got to pick which stores to divest I suspect Baker City was a "cherry" of sorts. Probably not a highly profitable Albertsons to begin with. But, a store that was newer on paper and maybe doing more volume than the local Safeway to help make it look like they were not giving Haggen all dog stores.

Very sad to see that set of photos, the store looks great even as it is about to start a liquidation sale.

I hope an independent or some other chain picks it up and takes a substantial portion of the business of the Safeway in that city. I hope the same for as many of the other closed locations as possible. I do think there are operators who could see that store in Baker City as viable. Ridleys, Pauls, Rosauers, etc. Maybe even Kroger or Wal Mart?

It is unfortunate Haggen did not have the willingness to make meat and potato type of stores like this work. It isn't that hard. Basic mix at basic prices... Associated Utah probably would have been a better supplier to get them promotions that cater to that sort of customer. Supervalu seems to be a terrible wholesaler, where are the promotions on center store? Haggen Stores supplied by Supervalu have just as awful, if not worse, of pricing as the Haggen Stores down in SoCal supplied by Unified. I am beginning to think the problem is not the suppliers, but Haggen itself's pricing attitude. Associated Utah's independents seem to be doing very well, growing, and running good price competitive ads every week. That is because those independents have Associated Utah doing group buys for them and getting them deals on items and then running these ads to drive in customers. How do 1-2 store independents understand this but a chain the size of Haggen did not and STILL does not understand it?

I am really disgusted by this whole thing. Haggen strikes me as something that absolutely tried to fail. The article discussing the real estate transactions probably sums up the reasons. One of the reasons Haggen was approved as a buyer over someone like Sam Zell and another interested "investment" group was because they were an actual grocer and the FTC was concerned of the stores being sold for investment purposes. It would appear to me Comvest bought the stores for investment purposes under false pretenses of actually wanting to run them as a grocer. Comvest used Haggen, used the Albertsons employees, and used these communities... ruining many grocery people's careers in the process and hurting who knows how many small business owners surrounding these stores.

[rvt]

Isn't it about the time we find out if there are any bids other than Gelsons and Smart and Final?

The Trabuco Haggen is toward the end of the closing sell off (60%). One thing I thought interesting was produce, popular dairy items (milk), small variety of bread, and possibly some meats continued to be brought in to the store during the liquidation. Yesterday was the first day I noticed substantially reduced produce-. During most of the sale I've noticed employees stocking and culling the produce and dept was nearly complete. Evidently with the greatly increased floor traffic from the sale it has been worth keeping these staples in stock. Also FWIW music has been on during all visits.

[klkla]

Isn't it about the time we find out if there are any bids other than Gelsons and Smart and Final?

I thought we might have heard something by now, as well. Next Monday is the auction so we should at least know the results of that soon.

I am reading through some of the court documents now. A lot of objections from the landlords over CURE costs (the amount of money owed to the landlord that have to be paid before the properties can be transferred to another operator). The property owners say they are owed much more than what Haggen is claiming.

One of the most interesting is the store in San Ysidro. The owners of that property don't seem to really want Smart & Final as a tenant or else want to negotiate a new deal themselves. 1 - They claim that Albertsons was in default when they transferred the lease to Haggen in the first place. Albertsons had not been paying the correct rent or Common Area Maintenance (CAM) costs and owed them $119,000. 2 - Haggen continued to under pay CAM and didn't pay any rent at all in September and they owe $29,000. 3 - Haggen attempted to extend the lease for it's last five year extension on November 1st of this year but the landlord rejects the extension because the lease was in default and says that the lease expires after next month on December 31st, 2015 even if Smart & Final assumes it.

Spirit, the company that bought a bunch of stores from Haggen earlier this year which they then leased back, also filed an interesting objection. They claim that Haggen agreed to pay the rent for all nineteen stores in one payment every month and that these stores are all part of one master lease. As a result they say Haggen has to reject all the stores in the lease or none. If the judge agrees with their objection the deal for Gelson's to operate the Laguna Beach and Carlsbad properties, and for Smart & Final to operate the Westlake Village, Palmdale, Chula Vista, El Cajon, and Atascadero properties will be invalid.

Also, the UFCW made a formal objection to the sale of any stores to Smart & Final. Unlike their past filings which were dismissed by the judge with no comment this one actually quotes case law. In short they say that Haggen agreed to accept the union agreements in place with Vons/Albertsons. The union says they also agreed that if they sold the stores they would have to inform the new buyers of the agreement and that the buyer would have to consider hiring employees from the stores. However, the buyer would be able to hire the employees on 30 day probation and be able to fire them with or without cause during the initial 30 days. That was the best the UFCW could negotiate? Their best argument is S&F 'should consider' hiring the current employees but can fire them for no reason as long as they do so in the first 30 days!?!?!?

[klkla]

After I posted yesterday two more filings were made on the case.

The auction for Monday has been canceled as it relates to the Gelson's and Smart & Final bids. There were no other bids for the 8 stores Gelson's wants and 28 stores Smart & Final wants. The hearing to finalize these purchases will be next Friday at 2:00 PM.

The auction will still occur for the rest of the stores, however.