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The roller coaster ride that is Haggen’s rapid expansion has taken another surprising turn – the troubled West Coast grocery chain has now filed for bankruptcy.

In papers filed with a federal bankruptcy court, and announced by Haggen late last night, the grocer plans to reorganize under Chapter 11 – and likely shed more stores, and possibly even some customer-friendly perks, in the process.

“The action we are taking today will allow us to continue to serve our customers and communities while providing Haggen with a process to re-align our operations to be positioned for the future,” Haggen CEO John Clougher said in a statement.

Haggen now plans “to market for sale some locations in the five states it operates, and to explore market interest for various store locations. Discussions are underway with interested parties to sell many of the company’s remaining assets.” In the meantime, Haggen has ensured up to $215 million in financing from lenders, which will allow it to “continue employee wages and certain benefits, and honor certain customer programs.”

That’s “certain” benefits, and “certain” customer programs. As if the high prices weren’t bad enough.

Prices have been at the forefront of Haggen’s troubles, since it hurriedly grew from a small 18-store regional grocer in the Pacific Northwest, to a 164-store West Coast chain with locations in Washington, Oregon, California, Nevada and Arizona. That expansion was made possible by the sale of Albertsons and Safeway stores, that those combining companies agreed to divest last year, in order to earn regulatory approval for their merger.

But rather than welcoming Haggen with open arms, many customers who checked out Haggen for the first time experienced sticker shock – and never came back. Complaints were commonplace, that prices for the very same products shot up virtually overnight, with no accompanying increase in service or quality. Once-busy Albertsons and Safeway stores, newly branded as Haggen, became ghost towns.

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And Haggen blames Albertsons.

Haggen sued Albertsons just last week, accusing it of sabotage, deceit and “unfair and unlawful conduct.” Instead of selling a slew of viable stores, the company sold Haggen a bill of goods, the plaintiff alleges. Albertsons provided Haggen with incorrect pricing information, saddled it with expiring food, and aggressively marketed its own competing stores in order to ensure Haggen’s failure, the grocer claims.

The “conversion process of the stores made Albertsons’ cooperation and good faith implementation of the terms of the deal in the Asset Purchase Agreement essential,” Haggen said in its statement last night. “This did not occur… which ultimately led to Haggen’s failure in its efforts to convert newly acquired stores and ultimately resulting in the Chapter 11 filing.”

Albertsons called Haggen’s allegations “completely without merit”, and “an attempt to deflect attention from their failure to comply with basic contractual obligations.”

Haggen had already been sued by Albertsons, for allegedly failing to pay for the inventory of several stores it acquired. And shortly after responding with its own billion-dollar lawsuit last week, Haggen was sued again, this time by a former employee-turned-whistleblower over Haggen’s high prices. Former pricing specialist Debra Sukiasian of Carpinteria, California says she was discriminated against and forced to retire, after she alerted her bosses that products were ringing up at higher prices than those that were displayed on the shelf. Sukiasian said her concerns were ignored, until she emailed the CEO himself – and then her bosses “upbraided” her and forced her out.

All of this comes on top of Haggen’s recent decision to shut down 27 stores, with a promise of more to come, as part of a “right-sizing strategy.” Now, that strategy will include even fewer stores, as Haggen shops around additional locations as part of the bankruptcy process. And with limited cash flow, Haggen may have a hard time “right-sizing” its prices, especially as it plans to honor only “certain customer programs.”

Since offering its own take on the story in its lawsuit against Albertsons, Haggen has earned some sympathy from shoppers, and even more scorn from others. Apparently sensitive to the criticism, the company recently disabled comments on its two divisional Facebook pages, but irked customers are still leaving snarky remarks in response to Haggen’s own unrelated posts.

It seems this troubled grocer just can’t win. And now that it’s filed for bankruptcy – it may not.

One Comment

  1. And the plot thickens…again! I did not know about the former employee lawsuit. Thanks so much for continuing to stay on top of this.

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