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QFC REPORTS RECORD THIRD QUARTER OPERATING RESULTS

 BELLEVUE, Wash., Sept. 21 /PRNewswire/ -- Quality Food Centers Inc. (NASDAQ: QFCI) today reported record sales and operating income for the 12 weeks ended Sept. 4, 1993.
 Third quarter sales increased 10.5 percent to $118.8 million, compared with $107.5 million last year. Comparable store sales increased 1.5 percent, despite continuing deflation in retail food prices, which decreased approximately 1.2 percent during the quarter.
 Operating income increased 3.6 percent to $9 million, or 7.6 percent of sales, in the third quarter. The recently enacted 1993 Tax Act raised corporate tax rates one percent retroactive to the beginning of 1993. This resulted in an additional $420,000 of federal income tax expense for the third quarter of 1993, including the retroactive effect and revaluation of the company's deferred tax liability (see attached financial highlights). Net earnings for the third quarter of 1993, after the $420,000 adjustment for the new tax law, were $5.7 million, or 29 cents per share, compared with $5.9 million, or 30 cents per share, a year ago. Net earnings would have increased 4.5 percent to $6.1 million, or 31 cents per share, without the adjustment for the 1993 Tax Act.
 According to Marc Evanger, vice president and chief financial officer, "Our third quarter sales increase is due to sales from the five stores we have added over the last twelve months, additional sales resulting from our expansion and remodeling program and our comparable store sales gain. Certain external factors reduced our third quarter sales growth. In addition to continued food price deflation, we had unseasonably poor summer weather -- June's rainfall was more than double the prior year and we had the coldest and cloudiest July on record." Evanger added, "Operating margins declined slightly during the third quarter due to higher occupancy costs associated with the 18 percent increase in QFC's square footage over a year ago."
 For the 36 weeks ended Sept. 4, 1993, net earnings increased 11 percent to $18.6 million, or 95 cents per share, after reflecting the reduction in earnings of $420,000, or 2 cents per share, due to the recently enacted 1993 Tax Act, compared with net earnings of $16.8 million, or 86 cents per share, in the comparable period last year. Sales for the 36-week period of 1993 reached $354.6 million, up 13.3 percent from 1992. Year-to-date comparable store sales increased 3.5 percent.
 Dan Kourkoumelis, QFC president and chief operating officer, said, "We're very pleased with the company's performance in the third quarter. Despite operating in a softer sales environment, we were able to control operating costs while maintaining our high level of customer service. Our fundamentals remain strong, the Seattle/Puget Sound area remains a good, long-term market for QFC, and our people continue to do an outstanding job of taking care of our customers -- all critical to our continued profitable growth."
 Stuart Sloan, chairman and chief executive officer, stated, "In addition to producing solid financial results, we are excited about the progress we are making throughout our business, from our new merchandising programs to our expansion activities. Our fifth new store for 1993, located in the Federal Way area, is near completion and is scheduled to open later this fall. We also are continuing to expand and upgrade our existing store base. Our remodeled Bothell store reopened in April and last week we opened our replacement store in Wilderness Village. The expansion and remodeling of our Capitol Hill store is near completion and we have begun remodeling our Inglewood store, which we acquired earlier this year. Through new, acquired and remodeled stores, we will have added more than 19 percent to our square footage by the end of 1993. In addition, we have begun construction of a new QFC on the north end of Mercer Island, as we announced last month, which we plan to open in early 1994," Sloan continued. "We are also continuing to actively pursue other new store sites and acquisition opportunities. We have secured a number of sites by signing purchase and option agreements and others are in the negotiation phase. We are very excited about these stores, however, they are subject to certain contingencies or are still in the entitlement process."
 The Company also announced that its Board of Directors declared a regular quarterly cash dividend of five cents per share of the Company's common stock payable on Nov. 20, 1993 to shareholders of record as of Oct. 30, 1993.
 QFC is the largest independent supermarket chain in the Seattle/Puget Sound region of Washington State. QFC has served this area for 38 years and today operates 37 stores and employs 2,800 people. QFC's top priority is satisfying the needs of its customers by providing superior service, high-quality perishables and competitive prices at convenient store locations.
 QUALITY FOOD CENTERS NC.
 FINANCIAL HIGHLIGHTS
 Third Quarter - 1993
 (in thousands except per share amounts)
 12 Weeks Ended
 Sept. 4, percent of Sept. 5, percent of
 1993 sales 1992 sales
 Sales $118,842 100.0 $107.497 100.0
 Cost of sales and
 related occupancy
 expenses 88,646 74.6 79,685 74.1
 Marketing, general
 and administrative
 expenses 21,179 17.8 19,109 17.8
 Operating income 9,017 7.6 8,703 8.1
 Interest income 230 0.2 184 0.2
 Earnings before 9,247 7.8 8,887 8.3
 taxes
 Provision for income taxes
 Before tax rate
 change 3,074 2.6 2,982 2.8
 Tax rate change for
 12 weeks 92 0.1 -- --
 Retroactive effect
 (1/01/93 to 6/12/93) 190 0.2 -- --
 Revaluation of deferred
 tax liability 138 0.1 -- --
 Total income taxes 3,494 3.0 2,982 2.8
 Net earnings $ 5,753 4.8 $ 5,905 5.5
 Earnings per share
 Before tax rate
 change $ 0.31 $ 0.30
 Tax rate change for
 12 weeks -- --
 Retroactive effect 0.01 --
 Effect of deferred
 taxes 0.01 --
 Net earnings per
 share $ 0.29 $ 0.30
 Average shares
 outstanding 19,646 19,609
 Cash and Cash
 Equivalents $ 35,378 $ 27,720
 Total Assets 170,153 137,358
 Shareholders'
 Equity 127,287 99,963
 Depreciation
 Amortization 2,127 1,731
 Number of Stores 37 32
 36 Weeks Ended
 Sept. 4, percent of Sept. 5, percent of
 1993 sales 1992 sales
 Sales $354,638 100.0 $313,079 100.0
 Cost of sales and
 related occupancy
 expenses 264,119 74.5 233,194 74.5
 Marketing, general
 and administrative
 expenses 62,629 17.6 55,230 17.6
 Operating income 27,890 7.9 24,655 7.9
 Interest income 637 0.1 568 0.2
 Earnings before 28,527 8.0 25,223 8.1
 taxes
 Provision for income taxes
 Before tax rate
 change 9,507 2.7 8,464 2.7
 Tax rate change for
 12 weeks 92 -- -- --
 Retroactive effect
 (1/01/93 to 6/12/93) 190 0.1 -- --
 Revaluation of deferred
 tax liability 138 -- -- --
 Total income taxes 9,927 2.8 8,464 2.7
 Net earnings $ 18,600 5.2 $ 16,759 5.4
 Earnings per share
 Before tax rate
 change $ 0.97 $ 0.86
 Tax rate change for
 12 weeks -- --
 Retroactive effect 0.01 --
 Effect of deferred
 taxes 0.01 --
 Net earnings per
 share $ 0.95 $ 0.86
 Average shares
 outstanding 19,620 19,618
 -0- 9/21/93
 /CONTACT: Marc Evanger, vice president, chief financial officer of QFC, 206-455-3761/
 (QFCI)


CO: QFC Inc. ST: Washington IN: REA SU: ERN

RB -- SE003 -- 3971 09/21/93 07:51 EDT
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Date:Sep 21, 1993
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