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MEGAFOODS STORES INC. ANNOUNCES NEW SUPPLY ARRANGEMENT

 MESA, Ariz., Dec. 10 /PRNewswire/ -- Megafoods Stores Inc. (NASDAQ: MEGF; AMEX: MFS.A) today announced that it has executed a definitive supply agreement with Fleming Companies Inc. Under the terms of the agreement, Megafoods will enjoy a substantial cost of sales benefit compared to its current supply contract with Fleming. The agreement will supply the 46 stores in Arizona, California, Nevada and Texas which the company will have opened by year-end. The company is repaying all borrowings from Kroger in connection with the San Antonio stores and is switching its buying to Fleming.
 Dean Miller, president and chief executive officer, said, "We are excited to have completed the most competitive supply arrangement in the history of Megafoods. It will allow us to enjoy the same benefits as if we were operating our own warehouse. As the agreement will take force immediately, we should see gross margin enhancement mid to late first quarter."
 Megafoods opened its 43rd store in Tempe, Ariz., on Wednesday, Dec. 8. It anticipates opening three additional stores next week, located in Santee, Calif., Blythe, Calif., and Henderson, Nev. Seven stores scheduled to open in the first half of 1994 are presently under construction.
 -0- 12/10/93
 /CONTACT: Jack J. Walker, CFO, 602-957-3152, or Sondra L. Mize, investor relations, 602-545-3235, both of Megafoods Stores/
 (MEGF MFS)


CO: Megafoods Stores Inc. ST: California IN: REA SU:

MF-JB -- LA024 -- 2691 12/10/93 13:57 EST
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Publication:PR Newswire
Date:Dec 10, 1993
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