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AMERICAN STORES CO. $100 MILLION 7.17 PERCENT MEDIUM-TERM NOTES DUE 2003 RATED 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, June 4 /PRNewswire/ -- American Stores Co.'s $100 million 7.17 percent medium-term notes due 2003 are rated `BBB' by Fitch. This issue is a takedown from a previously rated senior debt shelf registration, which is now depleted. The credit trend is stable.
 The rating reflects American Stores' improving profitability and its successful deleveraging from the 1988 acquisition of Lucky Stores Inc., as well as its strong market share in major U.S. metropolitan areas.
 The company continues to improve its profitability by expanding profitable retail formats and enhanced marketing and inventory management. As a result, operating margins improved to 3.3 percent of net sales at fiscal year-end 1992 versus 2.9 percent the prior year. During 1992, the company completed the final asset disposals from the 1988 Lucky acquisition. Proceeds from these asset sales were applied to reduce debt; fiscal 1992 year-end leverage including capitalized operating leases was 67.2 percent versus 79.7 percent at fiscal year-end 1989. Due to this deleveraging and improved operating profits, fixed charge coverage was 2.9 times at fiscal year-end 1992.
 However, American Stores' recently announced price reduction policy for its California Lucky Stores is a credit concern, as this may lead to profit margin erosion. Lucky Stores account for approximately 38 percent of total net sales and 40 percent of total operating profit. This price reduction policy is a further indication of the extreme price sensitivity in the depressed California market as well heightened competitive pressures.
 Proceeds of this debt offering will be used to reduce short-term debt and long-term real estate financing obligations. This transaction will lower the company's overall effective interest rate and extend debt maturities.
 American Stores Co. is one of the nation's largest food and drug retailers, operating 1,676 stores in 27 states. Its principal retail operations include Lucky Stores, Jewel Food Stores, Acme Markets, Star Market, Jewel Osco, Osco Drug, and Sav-on.
 -0- 6/4/93
 /CONTACT: Anne Marie May of Fitch, 212-908-0589/
 (ASC)


CO: American Stores Co. ST: Utah IN: REA SU: RTG

WB -- NY043 -- 5511 06/04/93 14:36 EDT
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Publication:PR Newswire
Date:Jun 4, 1993
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