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MEGAFOODS STORES INC. ANNOUNCES THIRD QUARTER 1993 RESULTS

 MESA, Ariz., Nov. 9 /PRNewswire/ -- Megafoods Stores Inc. (NASDAQ: MEGF, AMEX: MFS.A) today reported increased sales for the third quarter 1993. Sales for the 13 weeks ended Oct. 2, 1993, were a record $94,364,000, compared to $72,230,000 during the same quarter last year, an increase of 30.6 percent. Year-to-date sales grew 38.2 percent to $278,574,000 from $201,620,000 in the prior year. Same store sales for the third quarter increased 1.2 percent.
 The company incurred a loss of $5,088,000 ($0.60 per share) during the quarter, compared to net income of $453,000 ($0.09 per share) for the same quarter last year.
 The company previously announced that it anticipated the costs associated with the opening of the 15 San Antonio stores would be approximately $4.5 million and that such costs would be recorded in the third quarter of 1993, resulting in a net after-tax loss for the quarter. The company now estimates those San Antonio costs will be approximately $5.7 million.
 The San Antonio stores opened between Oct. 27 and Oct. 29, some two weeks later than originally expected due to contractor and systems delays. The delay contributed significantly to the additional cost and increased the amount of the loss for the quarter.
 Commenting on the results, Dean Miller, president and chief executive officer, said, "No one likes to report a loss. However, it relates to the establishment of the new San Antonio division and not on- going operations; the $5.7 million is part of the cost of getting into business in the area. Unlike some retailers, we treat store opening costs as an expense rather than a capital asset. We believe this conservative accounting treatment is in the long-term interests of our stockholders,"
 Miller continued, "We expect to open an additional seven stores in the fourth quarter to bring our total store count to 46 by year-end. Given these openings, plus San Antonio, and the time it takes for the stores' gross margin to come in line, the fourth quarter results will bear this burden. We remain confident that 1994 will reap the benefit of the seeds we are presently sowing."
 The company opened its 40th store in Apache Junction, Ariz. (Greater Phoenix market) on Nov. 5 and plans to open its 41st store on Friday, Nov. 12, in Phoenix. Megafoods Stores Inc. operates price impact supermarkets in Arizona, Nevada, California and Texas.
 An investor teleconference will be held on Wednesday, Nov. 10, 1993, at 11 a.m. EST.
 MEGAFOODS STORES INC.
 Financial Summary
 Unaudited
 (In thousands, except per share amounts)
 13 Weeks Ended 39 Weeks Ended
 Oct. 2, Sept. 26, Oct. 2, Sept. 26,
 1993 1992 1993 1992
 Sales $94,364 $72,230 $278,574 $201,620
 Gross profit 15,011 11,583 45,797 31,807
 Net income (loss) (5,088) 453 (2,972) 112
 Net income (loss)
 per share (0.60) 0.09 (0.35) 0.03
 Weighted average
 number of shares
 outstanding 8,494 5,029 8,476 4,343
 -0- 11/9/93
 /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: Arizona IN: REA SU: ERN

JL-JB -- LA038 -- 2485 11/09/93 17:52 EST
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Publication:PR Newswire
Date:Nov 9, 1993
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