Bashas' Inc., the state's largest privately owned grocery chain, will seek bankruptcy court approval to close 14 underperforming stores, including two in the Tucson area.
The grocer, which also operates Food City and AJ's Fine Foods stores, is seeking court permission to close a Bashas' at 100 S. Houghton Road, near Broadway, and one at 12100 N. Dove Mountain Blvd. in Marana.
The 14 stores are slated for closure by Oct. 10, but some stores could close sooner, said Mike Proulx, Bashas' president and chief operating officer.
Bashas' filed for Chapter 11 bankruptcy protection on July 12 to restructure its debt. The company found itself struggling financially with increasing competition, tightening credit and Arizona's lagging economy.
Under Chapter 11, Bashas' is asking the court to terminate leases and contracts it sees as detrimental to the company's survival, officials said.
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"We continue to look at leases for renegotiation, and in some cases, some of the landlords can't make enough allowances," Proulx said. "And that's when we start looking at closures."
Proulx said the store employees were notified Monday morning about the closure plans. The grocery chain will look to transfer as many employees as it can, starting with full-time and salaried positions, he said.
There will be some layoffs, but Proulx could not say how many.
In the Phoenix area, the store-closure list includes six Bashas', three Food City stores and an AJ's Fine Foods.
Also on the list is a Food City in Willcox and a Bashas' in Winslow.
Bashas' began closing struggling stores earlier this year. Last month it closed 10 stores, not long after shutting down five stores during the spring, Proulx said.
There is a possibility of more closures, Proulx said. But the company still plans to come out of bankruptcy at the beginning of next year.
Bashas' expanded rapidly during the housing boom, but the new stores turned into a liability when the boom collapsed.
The Bashas' in Marana's Dove Mountain subdivision, which opened in late 2006, exemplifies that, said Greg Furrier, a principal with Picor Commercial Real Estate Services.
"They got into trouble where they went into areas where they speculated there would be future growth," Furrier said.
Also, with the Dove Mountain location, Bashas' could not rely on commuter business, and when a Fry's Marketplace opened nearby at 12100 N. Thornydale Road, it brought competition to an already thin market, Furrier said.
Judy Graydon, who works at Heritage Highlands at Dove Mountain, said people in that community began to worry about the Bashas' store closing when word of the bankruptcy spread last month. It's not a very busy store, she said, but it's important to the people who shop there.
She said people were excited when it first opened. "Before that, there was virtually no available shopping," Graydon said.
As for the Bashas' on South Houghton Road, there's a lot of competition in the area, Furrier said. Several grocery stores are within a few minutes of one another, which can make it difficult for a store to stay profitable.
"It's not like you have customers who are captured and stuck, and don't have any option but to shop with you," Furrier said.
SLATED FOR CLOSURE
Tucson area:
• Bashas', 100 S. Houghton Road
• Bashas', 12100 N. Dove Mountain Blvd., Marana
Phoenix area:
• Bashas', 6720 E. Broadway Road, Mesa
• Bashas', 2840 S. Alma School Road, Chandler
• Bashas', 6760 W. Deer Valley Road, Glendale
• Bashas', 1050 E. Pecos Road, Chandler
• Bashas', 4874 S. Val Vista Road, Gilbert
• Bashas', 2075 N. Pebble Creek Parkway, Goodyear
• Food City, 1245 E. Southern Ave., Mesa
• Food City, 4344 W. Indian School Road, Phoenix
• Food City, 450 S. Country Club Drive, Mesa
• AJ's Fine Foods, 4975 S. Alma School Road, Chandler
Elsewhere in Arizona:
• Bashas', 1500 N. Park Drive, Winslow
• Food City, 900 N. Rex Allen Drive, Willcox