RALPHS SAYS RECESSION HURT SALES, EARNINGS

COMPTON, Calif. -- Ralphs Grocery Co. here said the ongoing recession in southern California resulted in lower sales and earnings for the second quarter ended July 17.

r and 1.6% for the first half of the fiscal year.

Ralphs said its sales continue to be adversely affected by the southern California recession and competitive activity, including the opening of new stores and remodeling of existing facilities as well as recent pricing and promotional changes.

The decline in earnings, the company said, is primarily the result of decreased operating income, higher interest expense due to increases in interest rates and an adjustment to income taxes in last year's second quarter.

A securities analyst, who asked not to be named, said the economy is "obviously not giving Ralphs much to work with." An increase in selling, general and administrative expenses has hurt Ralphs' gross margins, the analyst said. "But after a while, you just can't cut anymore."

2ND-QUARTER RESULTS

Qtr Ended 7/17/94 7/18/93

Sales $625 million $629 million

Change -0.6%

Same-store -4.4%

Net Income $7.2 million $12.9 million

Change -44.3%

24 Weeks 1994 1993

Sales $1.24 billion $1.26 billion

Change -1.6%

Same-store -4.1%

Net Income $15.6 million $16.8 million

Change -7.3%