GULF COAST COMPETITION SAID TO HURT DELCHAMPS

MOBILE, Ala. -- Delchamps here blamed its second consecutive quarter of disappointing sales and earnings on continued competitive pressures in the Gulf Coast . For the second quarter ended Dec. 31, the company reported net earnings dropped 93.3% to $168,000 from $2.47 million in the second quarter of 1993.Sales fell 5.1% for the quarter to $260.45 million from $274.51 million. Same-store sales decreased

MOBILE, Ala. -- Delchamps here blamed its second consecutive quarter of disappointing sales and earnings on continued competitive pressures in the Gulf Coast . For the second quarter ended Dec. 31, the company reported net earnings dropped 93.3% to $168,000 from $2.47 million in the second quarter of 1993.

Sales fell 5.1% for the quarter to $260.45 million from $274.51 million. Same-store sales decreased 7.8%.

For the half, earnings dropped 67.1% to $1.64 million, compared with earnings of $4.99 million for a similar period the previous year.

Sales for six months decreased 2.7% to $526.66 million from $541.08 million in 1993. Same-store sales fell 5.5%.

Delchamps recently estimated that competitors will have opened 119 new stores in the region by the end of the 1994-'95 period.

Those competitors include Albertson's, Bruno's, Publix and Winn-Dixie among grocery operators, and Wal-Mart and Kmart among supercenter operators.

Competitive pressures were evident last quarter as well, as Delchamps saw net sales, earnings and same-store sales decline 0.1%, 54.2% and 3.1%, respectively.

"A number of competitors have expanded into Delchamp's Gulf Coast market, which has had a depressing effect on Delchamps' same-store sales," said Steve Hofheinz, an analyst with Sterne Agee & Leach, Atlanta.

In the second quarter, the firm bought seven supermarkets from Kroger Co. and sold two of its own to the Cincinnati-based wholesaler.

The Kroger stores have yielded a substantial increase in market share for the company, said Randy Delchamps, chairman, president and chief executive officer.

Delchamps opened one supermarket and closed four in the period. The firm has 122 supermarkets and 12 liquor stores in the Southeast.

2nd-QUARTER RESULTS

Qtr Ended 12/31/94 1/1/94

Sales $260.45 million $274.51 million

Change -5.1%

Same-Store -7.8%

Net Income $168,000 $2.47 million

Change -93.3%

Inc/Share 2 cents 35 cents

52 Weeks 1994 1993

Sales $526.66 million $541.08 million

Change -2.7%

Same-store -5.5%

Net Income $1.64 million $4.99 million

Change -67.1%