Sheehan & Associates, P.L.C.

When it all goes bad

 

To be in business, you have to be optimistic. While you know there will be rough patches and challenges from time to time, you have to understand how to get through those difficult times and prosper in the end.

But there are times when all the optimism in the world simply can no longer pay the bills and keep the lights on. And that is when you have to sell. It appears that a grocer based on the West Coast came to that conclusion this month, little more than a year after a grand plan was put in place that would have transformed the small company into a regional player in multiple states.

 

The 18-store Haggen chain acquired 146 stores from Albertsons and others last year and hoped to become a regional power. Instead, they filed for protection under Chapter 11 as they struggled with $1.4 billion in debt from the acquisition and closed all of its stores in California.

They are also embroiled in lawsuits and countersuits, with Haggan making allegations of "systemic efforts" by Albertsons "to eliminate Haggen as a competitor in five states" and Albertsons suing them for the cost of the inventory in the stores they had bought last year.

As many as 8,000 workers could lose their jobs and many of the stores may remain vacant, as few are expected to be bought as an operational store. Haggen will be reduced to 37 stores in its home state.

Observers had questioned the wisdom of the deal, and the company failed to understand the pricing structure necessary to compete. They may have learned too late that relying on data from your competitors may not work to your benefit.

Source: latimes.com, "Grocery chain Haggen is leaving California, Nevada and Arizona," Shan Li and Andrew Khouri, September 25, 2015

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Sheehan & Associates, P.L.C.
1460 Walton Blvd , Suite 102
Rochester Hills, MI 48309

Toll Free: 877-600-7891
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