RALPHS EARNINGS DROP AS QUARTER SALES RISE

COMPTON, Calif. -- Ralphs Grocery Co. here reported increased sales and decreased earnings for the third quarter ended Oct. 9 and decreased sales and earnings for the year to date.

$1.86 billion for the year to date. Same-store sales fell 3.1% for the quarter and 3.8% for the 36 weeks.

Cash flow rose to 8.5% of sales, or $52 million, or the quarter, compared with 8.1% and $49.6 million a year ago; for the 36 weeks, cash flow rose to 8.4% of sales, or $156.1 million, compared with 8.3%, or $155.9 million, a year ago.

The company, in its 10-Q filing with the Securities and Exchange Commission, said sales continue to be adversely affected "by the significant recession in southern California, continuing competitive new-store and remodeling activity and recent pricing and promotional changes by competitors."

On Sept. 14, Ralphs' parent company, Ralphs Supermarkets, entered into a definitive agreement to merge with Food 4 Less Supermarkets, La Habra, Calif. The merger is expected to be concluded in early January.

Bob Lupo, a securities analyst with PaineWebber, New York, said that "Despite continuing difficulties with sales trends related to the southern California economy and the competitive situation, Ralphs continues to improve its cash flow.

"Overall, it's doing OK in a very difficult environment. It's managing costs well, it's improving sales and customer acceptance and its new promotional programs [emphasizing customer values] have been successful."

Ralphs operates 168 stores in southern California. During the quarter it opened two new stores, closed one and remodeled one; during the 36-week period it opened five new stores, closed two and completed three remodels.

3RD-QUARTER RESULTS

Qtr Ended 10/9/94 10/10/93

Sales $615.4 million $612.8 million

Change 0.4%

Same-store -3.1%

Net Income $4.3 million $7 million

Change -38.1%

36 Weeks 1994 1993

Sales $1.86 billion $1.87 billion

Change -0.95%

Same-store -3.8%

Net income $19.9 billion $23.7 billion