MARKET DROP HURT FOOD STOCKS

MARK TOSH

NEW YORK -- After outperforming the market in February and March, most supermarket industry stocks gave back their hard-earned price increases during the recent market decline.

The Dow Jones Industrial Average, which lost 139 points the last week of March, stabilized last week and closed Wednesday at 3,678. Many supermarket stocks, which had climbed even as the market began declining in early February, settled in at lower price levels, though.

Stocks of 11 supermarket operators and four wholesalers hit 52-week highs between mid-February and March 31. Among the companies that hit new highs were: Albertson's, Boise, Idaho; American Stores, Salt Lake City; Hannaford Bros., Scarborough, Maine; Ingles Markets, Black Mountain, N.C; Kroger Co., Cincinnati; Richfood, Richmond, Va.; Riser Foods, Bedford Heights, Ohio; Safeway, Oakland, Calif., and Super Food Services, Dayton, Ohio.

Albertson's fared better than most other operators' stock during the market's decline. It hit a high of $30.88 in late March and came close to topping that figure last Tuesday, closing at $29.88.

Safeway, which traded at a high of $27 in late March, was not as fortunate last week. It dropped below $24 before bouncing back to near $25.75 at midweek.

Brooks O'Neil, a securities analyst at Piper Jaffray, Minneapolis, said Safeway enjoyed a strong move upward following its better-than-expected earnings in the fourth quarter.

"But it seemed to give back a good portion of that [gain] in the last week or two for no real good reason," he said. "My understanding is that business remains pretty strong."

In general, O'Neil said, supermarket industry stocks did not have "a huge appreciation" relative to other stocks in the market's long climb and they should be able to weather the current market decline.

"Supermarkets stocks should benefit from an improving economy and a little pickup in food inflation, if we ever get that," he said. "So they're not a bad place to hide in an unsettled market."