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 ROSWELL, Ga., Dec. 9 /PRNewswire/ -- Harry's Farmers Market, Inc. (NASDAQ-NMS: HARY) announced today its earnings for the fiscal 1994 third quarter.
 Revenues for the third quarter ended Oct. 27, 1993, were $26.6 million compared with $24.4 million for the same period the prior year. The company incurred a net loss for fiscal 1994 third quarter of $256,000, or ($0.04) per share, compared with net income of $109,000, or $0.03 per share, for the same period of the prior year. Comparable store sales increased 2.7 percent from fiscal 1993 third quarter.
 Revenues generated for the third quarter from the first prototype Harry's In A Hurry, a 3,700-square-foot fresh convenience store, were $1,573,000. Several more stores are planned for calendar 1994, with the second Harry's In A Hurry store due to open in February 1994.
 The gross margin for fiscal 1994 third quarter, which includes overall costs associated with its manufacturing operations, decreased to 24.6 percent from 26.8 percent in fiscal 1993 third quarter. Third quarter was the first quarter during which both manufacturing facilities, the bakery and the USDA inspected food processing facility, were fully operational for the entire quarter. The decrease in gross margin was primarily due to increased manufacturing costs associated with these facilities. Both facilities were operating at low utilization during the quarter. The utilization improved with the Cobb megastore opening in fourth quarter and will continue to improve as new stores are open.
 Direct store expenses for fiscal 1994 third quarter improved 2.0 percent to 15.3 percent from 17.3 percent as a percentage of sales in fiscal 1993 third quarter due to greater operating efficiencies at store level. Selling, general and administrative expenses as a percentage of net sales for fiscal 1994 third quarter increased to 9.0 percent from 6.0 percent of net sales in fiscal 1993 third quarter, as the company continues to build its staff in preparation to execute its growth plan.
 The company successfully opened its third megastore, located in Cobb County, Ga., on Oct. 28, the first day of the fourth quarter. The company capitalized approximately $1.6 million of pre-opening expenses which will be expensed during the next six months.
 Commenting on the results, Harry Blazer, CEO and president, said: "During the most recent three quarters, we have invested extensively in our manufacturing and distribution resources in preparation for growth. The additional expenses involved with operating these facilities have not yet been off-set by improvements in productivity which we feel will be forthcoming. These will come from better plant utilization as new retail units come on line and also by improving our operating efficiencies and our ability to more accurately match production with demand. We expected our selling, general and administrative expenses to peak as a percentage of sales in third quarter. We expect these expenses to decrease as a percentage of sales in future quarters as new retail units are opened. I am pleased at the way we are operating at the store level as indicated by the improvement in our direct store expenses. Our two newest stores, the Cobb megastore and the Harry's In A Hurry store, are exceeding our expectations."
 Harry's Farmers Market, Inc. owns and operates concept megastores and convenience stores specializing in perishable food products, as well as specialty and gourmet non-perishable food products that are complementary to the fresh food offerings.
 Consolidated Statement of Earnings
 For the quarter ended 11/1/92 Pct. 10/27/93 Pct.
 Net sales $24,442 100.0 $26,610 100.0
 Cost of goods sold 17,899 73.2 20,067 75.4
 Gross profit 6,543 26.8 6,543 24.6
 Operating expenses
 Direct store expenses 4,230 17.3 4,064 15.3
 Selling, gen. and admin. exps. 1,475 6.0 2,408 9.0
 Deprec. and other amort. 458 1.9 510 1.9
 Amort. of pre-opening exps. --- 0.0 81 0.3
 Total operating expenses 6,163 25.2 7,063 26.5
 Operating profit 380 1.6 (520) (2.0)
 Other income (expense)
 Interest (242) (1.0) (34) (0.1)
 Other 39 0.2 137 0.5
 Total other income (expense) (203) (0.8) 103 0.4
 Earnings before income taxes 177 0.7 (417) (1.6)
 Income taxes 68 0.3 (161) (0.6)
 Earnings after taxes $ 109 0.4 $ (256) (1.0)
 Earnings per share $ 0.03 $ (0.04)
 Average shares outstanding 4,200 6,164
 -0- 12/9/93
 /CONTACT: David A. Pattillo, executive vice president and chief financial officer of Harry's Farmers Market, 404-664-6300/

CO: Harry's Farmers Market, Inc. ST: Georgia IN: REA SU: ERN

BR-BN -- AT002 -- 2062 12/09/93 08:05 EST
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Publication:PR Newswire
Date:Dec 9, 1993

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