PENN TRAFFIC'S 3RD-QUARTER SAME-STORE SALES DECLINE

ELLIOT ZWIEBACH

SYRACUSE, N.Y. -- Penn Traffic Co. here said last week the accelerated closing of 11 Harts general merchandise stores in Ohio had a negative effect on sales for the third quarter ended Oct. 28. Although overall sales for the 13-week quarter were up 2% to approximately $845 million, the company said same-store sales declined 3.9% -- almost 1% more than the 3% decline most investors had anticipated, observers told SN. For the 39-week period, the 267-store operator said sales rose 4.7% to approximately $2.6 billion while same-store sales dipped 2.1%. The company said it expects to report full third-quarter results Nov. 29. Penn Traffic attributed the overall sales increase to the addition of 34 Acme Markets acquired last January from American Stores Co., Salt Lake City. It said the same-store declines were due to weak consumer spending; new competition from Wegmans Food Markets in upstate New York, and the accelerated closing of the 11 Harts stores. The company said disruptions in the Harts business affected total revenues for the quarter by approximately $4.5 million and same-store sales by approximately 0.6%. "While we had some short-term impact from the accelerated closing of the Harts stores, the overall effect of the implementation of this plan is positive," said Gary D. Hirsch, chairman. "We are receiving slightly greater net proceeds than the $15 million we originally anticipated. In addition, all of our management resources can now focus entirely on supporting our supermarkets." Penn Traffic said earlier this year it would exit the Harts business by the end of the year by turning four units into Big Bear Plus stores and closing the remaining 11 stores. Ed Comeau, a securities analyst with Donaldson Lufkin & Jenrette, New York, said Penn Traffic's sales trends have been slipping since the end of the first quarter. However, he said, Harts is only a minor factor in that decline. "The company has seen strong slippage in upstate New York and Pennsylvania, where new competition has opened larger stores and spending habits have been slipping," Comeau said.