PATHMARK POSTS INCOME IN PREMINARY RESULTS

MARK TOSH

WOODBRIDGE, N.J. -- Pathmark Stores here, formerly Supermarkets General Corp., said it expected net earnings from continuing operations to total about $19 million in the fourth quarter ended Jan. 29.

Pathmark reported a loss of $598.6 million in the previous year's fourth quarter, which included a $600.7 million writeoff of goodwill.

In preliminary results released last week, Pathmark said sales in the 13-week quarter totaled $1.08 billion, a 4.4% decline compared with $1.13 billion in the year-ago period. No same-store sales results were released.

Pathmark said the sales decrease primarily was due to the current period's exclusion of sales generated at five supermarkets that are expected to close or be sold in 1994.

The company did not report full-year results last week, but said it expects to release audited year-end results in about six weeks.

Operating earnings, or income before interest and taxes, totaled about $60 million in the quarter, according to preliminary results. This compared with an operating loss of $546 million in last year's fourth quarter.

Pathmark said it expected operating cash flow -- earnings before interest, taxes, depreciation and amortization -- would total $75 million in the fourth quarter, or 7% of sales. This compared with cash flow of $73.9 million, or 6.5% of sales, in the prior year's fourth quarter.

Interest expense declined about 15% in the quarter, or about $7 million, to an estimated $38.5 million.

Jack Futterman, chairman and chief executive officer, said Pathmark was pleased to report "meaningful bottom-line improvements for the fourth quarter." Futterman said the completion of a recapitalization last year and a lower effective tax rate were the keys to the company's performance.

"As the economy and weather normalize we hope to continue to make progress," he said in a statement.

Gary Giblen, a securities analyst at PaineWebber, New York, said Pathmark's cash-flow margin of 7% is a "high number relative to the rest of the industry." In the recent third quarter Pathmark reported a cash-flow margin of 5.2%.

Giblen said Pathmark's store-remodeling program and an improved gross-margin rate contributed to the strong cash-flow results in the quarter. Going forward, he said, Pathmark should continue to improve its results as it moves to close additional marginal stores and focus on core operations. The number and location of future store closings have not been disclosed, Giblen said.

Pathmark operated 148 supermarkets (including the five stores to be closed or sold) and 33 free-standing drug stores at the end of the quarter. Three new Pathmark supermarkets opened in the quarter and two units were closed.