Hang-Up for Gelson’s in Bagging Haggen Stores

Shoppers grab final items last Friday, Nov. 13, on shelves picked clean.
Shoppers grab final items last Friday, Nov. 13, on shelves picked clean.

Closed Haggen grocery stores in Laguna Beach and Carlsbad remain in limbo, while a bankruptcy court approved the sale of six other locations to Gelson’s Markets and 28 more to Smart & Final LLC.

An objection to the sale of the Laguna Beach and Carlsbad stores was submitted by the landlord to the bankruptcy court in Delaware, Rob McDougall, Gelson’s president and chief executive, said in a statement issued Monday.

“Gelson’s awaits the outcome of a future court decision, which may take several weeks,” he said. McDougall declined to specify the nature of the objections.

Despite the existence of an established Gelson’s store in Monarch Beach, just three miles from the former Haggen store, the company intends to operate both, “if the opposition posed by the landlord is settled,” McDougall said in a statement. He said a date for re-opening the Laguna store will be set once the landlord’s objections are resolved, McDougall said.

In a separate conflicting statement issued following a hearing Friday, Nov. 13, in Wilmington, Del.,

The scarce inventory on the last day of operations by Haggen in South Laguna.
The scarce inventory on the last day of operations by Haggen in South Laguna.

Haggen says the court approved the sale of eight locations in California to Gelson’s for $38 million. Smart & Final bid $56 million under a separate agreement, Haggen said. In addition, the company said it had accepted bids for another 55 stores in California, Oregon, Nevada and Washington, which will be considered at a hearing next week.

Court records filed on Friday, Nov. 13, show that at least one other objection was raised in a Gelson’s deal, related to $110,000 for real estate taxes, on a Rancho Mirage store.

The Gelson’s agreement approved by Judge Kevin Gross requires that contracts be transferred and remain in full force for the benefit and burden of the buyer.

The Haggen store in Laguna Beach anchors the Aliso Creek Shopping Center, managed by Shelter Bay Retail Group, a retail property manager in Mill Valley. Its executives did not return phone calls seeking comment. Shelter Bay was itself recently acquired by JLL Americas Retail, based in Chicago.

Prior to the Haggen takeover earlier this year, the Laguna market was owned by a succession of supermarket chains including Albertson’s, Lucky’s and Alpha Beta.

“We’re excited to become part of these communities, a process that may take time in order to customize stores for each neighborhood,” said McDougall. “Our goal is to retain as many local Haggen workers as possible while also giving opportunities to existing Gelson’s employees, as well as others who wish to join the Gelson’s family.”

Haggen filed for Chapter 11 bankruptcy on Sept. 8. Gelson’s was selected as a bidder in October and anticipates closing on the stores late this year. Gelson’s plans to relaunch its purchased stores early next year under its own brand with initial improvements to product selection and merchandising, followed several months later by redesign and construction. In addition to the newly acquired locations, Gelson’s is on track to open new stores in Rancho Mission Viejo and Manhattan Beach.

Founded in 1951, Gelson’s currently operates 18 full-service specialty grocery stores in Southern California.

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  1. Just what we didn’t need there, a store more expensive than Haggen. What we needed was a Stater Bros. or similar, not yet another very expensive store.

    Gelsons is nicer, but I expect it to struggle like Haggen did.


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