AMERICAN STORES VOLUME GAINS IN QUARTER, 26 WEEKS

SALT LAKE CITY -- American Stores Co. here said sales in its drug-store division helped boost overall sales for the second quarter and 26 weeks ended Aug. 2.

.3% for the half.

The company said sales at its food stores rose 0.1% for the quarter to $3.4 billion and 0.4% for the half to $6.7 billion, while drug-store sales were up 10.6% for the quarter to $1.4 billion and 11% for the half to $2.8 billion.

Same-store sales at American's Eastern food operations fell 1.3% for the quarter and the half, compared with gains of 2.6% and 3.1%, respectively, a year earlier; while same-store sales at its Western food operations declined 0.5% for the quarter and gained 0.2% for the half, compared with gains of 1.5% and 2.6%, respectively, a year ago. Drug-store same-store sales rose 5.4% for the quarter and 6.1% for the half, compared with gains of 5.8% and 5.4%, respectively, a year ago.

If comparable-store sales from food-store operations were modified to include the drug side of American's combination stores, the company said comparable-store sales for the quarter would have been down 0.5% on the food side and up 6.3% on the drug side, while comparable-store sales for the half would have been flat on the food side and up 6.7% on the drug side.

Net income for the quarter increased 8.2% to $90 million and fell 15.7% for the half to $124.2 million following onetime charges of $47.3 million, or 14 cents per share, related to the secondary stock offering of shares held by L.S. Skaggs and related parties and a reserve for the sale of the company's communications subsidiary.

According to Victor L. Lund, chairman and chief executive officer, "Our earnings growth and margin improvement were attained in spite of slower comparable sales brought on principally by a deflationary environment. Through careful pricing, effective customer loyalty promotions and procurement improvements, we drove a profitable sales mix that kept our loyal customers satisfied."

Lund also said the company's centralization of buying groups under the Delta Project has been completed with the move of grocery and general merchandise procurement to its headquarters here.

He said retail square footage increased by a net of 4.2% during the quarter with the opening of six new stores and completion of 12 remodels, combined with 16 store closings. American operates 1,689 stores in 27 states, including 169 combination stores that are each counted in both the food and drug-store totals.

American's food-store operations include Acme Markets, Malvern, Pa.; Jewel Food Stores, Melrose Park, Ill.; Lucky Stores North, San Leandro, Calif.; Lucky Stores South, Buena Park, Calif.; and Jewel Osco Southwest, Albuquerque, N.M. Its drug operations include Osco Drugs, Oak Brook, Ill., and Sav-on, Buena Park, Calif.

2ND-QUARTER RESULTS

Qtr Ended 8/2/97 8/3/96

Sales $4.8 billion $4.6 billion

Change 3%

Same-store 0.9%

Net Income $90 million $83.1 million

Change 8.2%

Inc/share 33 cents 28 cents

26 Weeks 1997 1996

Sales $9.5 billion $9.2 billion

Change 3.3%

Same-store 1.3%

Net Income $124.2 million $147.4 million

Change - 15.7%

Inc/Share 45 cents 50 cents

Includes a onetime charge of $47.3 million, or 14 cents per share, related to the secondary stock offering of shares held by L.S. Skaggs and related parties and a reserve for the sale of the company's communications subsidiary.